Theoretical Perspectives on Financial Globalization

Nicolas Coeurdacier

SciencePo Working papers Main from HAL

Abstract: Standard theory would predict that investors hold a well diversified portfolio of equities across the world but despite the process of `financial globalization,' investors still hold a disproportionate share of local equities in their portfolio: the `equity home bias.' Their consumption basket is also tilted toward domestic goods: the `consumption home bias.' In the data, these two biases are positively correlated across countries. We review the different theories that can explain this pattern of the data: hedging motives in portfolio decisions and frictions in international financial markets.

Keywords: Consumption home bias; Hedging motives; International portfolios; Portfolio home bias; Trade costs (search for similar items in EconPapers)
Date: 2013
References: Add references at CitEc
Citations:

Published in Gerard Jr. Caprio. Handbook of Safeguarding Global Financial Stability - Volume 2, Elsevier B.V., pp.201 - 207, 2013, 9780123978752

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Working Paper: Theoretical Perspectives on Financial Globalization (2013)
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:hal:spmain:hal-03394054

Access Statistics for this paper

More papers in SciencePo Working papers Main from HAL
Bibliographic data for series maintained by Contact - Sciences Po Departement of Economics ().