WHAT HINDERS CROSS-BORDER PORTFOLIO INVESTMENT IN EAST ASIA?

Daekeun Park () and Inseok Shin ()
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Daekeun Park: College of Economics and Finance, Hanyang University, Seoul, Korea
Inseok Shin: College of Business, Chung-Ang University, Seoul, Korea

The Singapore Economic Review (SER), 2013, vol. 58, issue 02, 1-22

Abstract: We examine statistical importance of a number of institutional factors, which have been alleged by market investors and policy commentators as significant barriers on cross-border portfolio investment in East Asian economies, but never been put to empirical tests yet. Taking advantage of the novel data set constructed by the ABMI-GoE, we empirically investigate the explanatory power of such institutional factors as market access-hindering regulations, foreign exchange controls, credit controls, taxation and inefficient post-trading infrastructure. We find that these alleged barriers indeed have significantly negative impacts on cross-border portfolio investment in East Asian economies. In addition, we find some support for the "pecking order" hypothesis in barriers on cross-border portfolio investment in the sense that barriers on post-trading efficiency and cost barriers are not effective unless barriers on market access are significantly lowered.

Keywords: Cross-border portfolio investment; barriers to cross-border investment; Asian Bond Markets Initiative; foreign exchange controls; settlement infrastructure; F3; G15 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (3)

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DOI: 10.1142/S0217590813500124

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