Why don\'t Asians invest in Asia:The determinants of cross-border portfolio holdings

Alicia Garcia-Herrero, Philip Woolbridge and Doo Yong Yang
Authors registered in the RePEc Author Service: Alicia Garcia Herrero

No 908, Working Papers from BBVA Bank, Economic Research Department

Abstract: This paper seeks to understand why Asian foreign investment is concentrated in financial markets outside of the region instead of in Asian markets. We analyse empirically the geographical composition of the cross-border portfolio holdings of more than 40 source countries. We compare these benchmark results with those of four subgroups: advanced industrial economies; emerging market economies; European economies; and Asia-Pacific economies. The lack of liquidity in Asian financial markets turns out to be one reason why Asian capital is invested predominantly outside the region, notwithstanding the short distances and large trade flows between Asian economies. Initiatives to improve the liquidity of Asian financial markets, therefore, may be a useful way to stimulate financial integration within the region.

Keywords: Cross-border portfolio investment; regional financial integration; gravity model (search for similar items in EconPapers)
JEL-codes: F21 F36 G11 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2009-04
New Economics Papers: this item is included in nep-ifn and nep-sea
References: Add references at CitEc
Citations: View citations in EconPapers (19)

Downloads: (external link)
https://www.bbvaresearch.com/wp-content/uploads/mi ... 08_tcm348-212914.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bbv:wpaper:0908

Access Statistics for this paper

More papers in Working Papers from BBVA Bank, Economic Research Department Contact information at EDIRC.
Bibliographic data for series maintained by OSCAR DE LAS PENAS SANCHEZ-CARO ().