The role of distance and financial development: Evidence from international financial markets

Wei Li, Xin Wang and Haofei Zhang

International Review of Financial Analysis, 2024, vol. 92, issue C

Abstract: This paper analyzes the role of distance and financial development in equity portfolio performance, using panel data on mutual fund holdings in the U.S. stock market from 39 countries. Our paper shows that financial development, represented by financial depth, is positively correlated with returns and returns’ standard deviation. Fund managers from countries with deeper financial markets earn higher returns at the cost of higher risks. This conjecture can be explained by our findings that fund managers from countries with deeper financial markets prefer small and growth stocks.

Keywords: Distance; Financial development; Returns; Returns’ standard deviation (search for similar items in EconPapers)
JEL-codes: F30 G11 G12 G15 (search for similar items in EconPapers)
Date: 2024
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:92:y:2024:i:c:s1057521924000401

DOI: 10.1016/j.irfa.2024.103108

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