International Portfolio Investment: Theory, Evidence, and Institutional Framework

Söhnke Bartram and Gunter Dufey
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Gunter Dufey: University of Michigan

Finance from University Library of Munich, Germany

Abstract: At first sight, the idea of investing internationally seems exciting and full of promise because of the many benefits of international portfolio investment. By investing in foreign securities, inves-tors can participate in the growth of other countries, hedge their consumption basket against ex-change rate risk, realize diversification effects and take advantage of market segmentation on a global scale. Even though these advantages might appear attractive, the risks of and constraints for international portfolio investment must not be overlooked. In an international context, finan-cial investments are not only subject to currency risk and political risk, but there are many institu-tional constraints and barriers, significant among them a host of tax issues. These constraints, while being reduced by technology and policy, support the case for internationally segmented securities markets, with concomitant benefits for those who manage to overcome the barriers in an effective manner.

Keywords: portfolio investment; international financial markets; diversification; currency risk (search for similar items in EconPapers)
JEL-codes: F31 G11 G15 (search for similar items in EconPapers)
Pages: 124 pages
Date: 2001-07-12
New Economics Papers: this item is included in nep-fin, nep-fmk and nep-ifn
Note: Type of Document - Acrobat PDF; prepared on IBM PC; to print on HP; pages: 124 ; figures: included. forthcoming in: Financial Markets, Institutions and Instruments, Vol. 10 (3), August 2001, 85-155
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Citations: View citations in EconPapers (24)

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Journal Article: International Portfolio Investment: Theory, Evidence, and Institutional Framework (2001)
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Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpfi:0107001

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