Information and capital flows revisited: The Internet as a determinant of transactions in financial assets

Changkyu Choi, Dong-Eun Rhee and Yonghyup Oh

Economic Modelling, 2014, vol. 40, issue C, 191-198

Abstract: We extend Portes et al. (2001) by introducing the Internet as a variable, and we test the model empirically by using cross-country panel data on portfolio flows between the United States and other countries from 1990 to 2008. Asymmetric information accounts for the strong negative relationship between international asset transactions and distance. The Internet plays an important role in mitigating information asymmetry between countries and increases the volume of cross-border portfolio flows.

Keywords: The Internet; Cross-border portfolio flows; Gravity equation; Information asymmetries; Home bias (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (19)

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Related works:
Working Paper: Information and Capital Flows Revisited: The Internet as a Determinant of Transactions in Financial Assets (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:40:y:2014:i:c:p:191-198

DOI: 10.1016/j.econmod.2014.03.027

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