 Search for yield and home bias in Asian bond marketsHiroya Tanaka, Keiichi Hori and Akihisa Shibata Economic Modelling, 2025, vol. 151, issue C Abstract: This paper examines how foreign investors' search-for-yield behavior affects home bias in the bond markets of Asian countries. Although numerous prior studies have addressed home bias in bond markets, most employ bond returns—not yields—as explanatory variables, and their ability to explain home bias has shown considerable variation. Using data from 2002 to 2021, we conduct regression analysis on foreign investors’ portfolio composition in 11 countries. The results confirm that higher yields reduce home bias, particularly in developing Asian countries. Specifically, while yield indicators do not show a significant impact on foreign investment in advanced Asian countries, they significantly promote foreign investment in developing Asian countries with relatively high yields. Furthermore, foreign investors are attracted exclusively to local-currency yields, not U.S. dollar-denominated yields. These trends have become more pronounced following the 2008 global financial crisis, indicating that developing Asian countries have emerged as major targets in the search-for-yield. Keywords: Search for yield; Home bias; Foreign bond investment; Portfolio selection (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:151:y:2025:i:c:s0264999325001634 DOI: 10.1016/j.econmod.2025.107168 Access Statistics for this article Economic Modelling is currently edited by S. Hall and P. Pauly More articles in Economic Modelling from Elsevier |
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