That's Where the Money Was: Foreign Bias and English Investment Abroad, 1866-1907

Benjamin Chabot and Christopher Kurz
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Christopher Kurz: Board of Governors of the Federal Reserve System

Working Papers from Economic Growth Center, Yale University

Abstract: Why did Victorian Britain invest so much capital abroad? We collect over 500,000 monthly returns of British and foreign securities trading in London and the United States between 1866 and 1907. These heretofore-unknown data allow us to better quantify the historical benefits of international diversification and revisit the question of whether British Victorian investor bias starved new domestic industries of capital. We find no evidence of bias. A British investor who increased his investment in new British industry at the expense of foreign diversification would have been worse off. The addition of foreign assets significantly expanded the mean-variance frontier and resulted in utility gains equivalent to a meaningful increase in lifetime consumption.

Keywords: Capital markets; Home bias; History; Victorian overseas investment (search for similar items in EconPapers)
JEL-codes: E44 F22 G11 G15 N21 N23 O16 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2009-06
New Economics Papers: this item is included in nep-his and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Working Paper: That's Where the Money Was: Foreign Bias and English Investment Abroad, 1866-1907 (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:egc:wpaper:972

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