Geography and financial decision making

Qinghai Wang

Chapter 6 in Handbook of Financial Decision Making, 2023, pp 133-153 from Edward Elgar Publishing

Abstract: Geographic preference is a pervasive feature in financial decision making. We summarize the empirical evidence on the role of geography in financial decision making and review various explanations for this puzzling phenomenon. For information based explanations of geographic preference, we emphasize the recent literature on endogenous information acquisition in investment decisions. Recent advances in social finance provide insights on the social context of economic activities. Geographic preference in investment decisions is embedded in the broad influence of social structure and social interactions on financial decision making. We discuss the role of social processes in explaining the geographic preference in financial decisions. After presenting facts on the geographic distribution of investors and firms in the United States, we discuss how the geographic dislocation between investors and firms, in combination with the geographic preference of investors in their investment decisions, generates frictions in U.S. financial markets.

Keywords: Business and Management; Economics and Finance (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (2)

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