"Putting All Eggs in One Basket" Thailand's Under-Investment Abroad: Impact and Explanations

Pornpen Sodsrichai, Sakkapop Panyanukul and Nantaporn Pongpatthananon
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Pornpen Sodsrichai: Bank of Thailand
Sakkapop Panyanukul: Bank of Thailand
Nantaporn Pongpatthananon: Bank of Thailand

No 2011-06, Working Papers from Monetary Policy Group, Bank of Thailand

Abstract: This paper presents the degree of under-investment in foreign assets, known as a home–bias phenomenon, in 30 developed and developing countries across the world including Thailand. We find that Thailand’s home-bias is high compared to other countries’ home-bias and it decreases at a slower pace over time. The study also shows that a country with higher levels of home-bias experiences lower international risk sharing and has more volatile consumption patterns during the sample period of 1970 to 2010. To strengthen Thailand’s resiliency to unexpected economic shocks and maintain country’s economic welfare through better consumption smoothing, the policy challenges identified in this paper include capital outflow measures, tax policy, coherent institutional supports and guidelines to improve investors’ internationalized skills.

Keywords: Thailand's; Under-Investment; Abroad (search for similar items in EconPapers)
Pages: 48 pages
Date: 2011-06
New Economics Papers: this item is included in nep-sea
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