Home Bias and the High Turnover / Linda L. Tesar, Ingrid M. Werner.

Format:

Book

Author/Creator:

Tesar, Linda L.

Contributor:

National Bureau of Economic Research.

Werner, Ingrid M.

Series:

Working Paper Series (National Bureau of Economic Research) no. w4218.

NBER working paper series no. w4218

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1992.

Summary:

This paper documents the available evidence on international portfolio investment in five GECD countries. We draw three conclusions from the data. First. there is strong evidence of a home bias in national investment portfolios despite the potential gains from international diversification. Second, to the extent investors hold international securities, the composition of the portfolio of foreign securities seems to reflect factors other than diversification of risk. Third, the high volume of cross-border capital flows and the high turnover rate on foreign equity investments relative to domestic equity markets suggests that transactions costs and incomplete information are unlikely to be important deterrents to international investment. These observations suggest that a richer set of models is required to account for international investment behavior.

Notes:

Print version record

November 1992.