International equity portfolio allocations and stock market development

Kwabi, Frank Obenpong and Thapa, Chandra and Paudyal, Krishna and Neupane, Suman (2019) International equity portfolio allocations and stock market development. Review of Quantitative Finance and Accounting. ISSN 0924-865X (In Press)

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Abstract

This paper examines whether the widely reported phenomena of home and foreign biases (i.e. sub-optimal international equity portfolio diversification) hold any ramifications for the development of stock markets. The results, analysed using macro- and micro-level data, support the view that stock markets that are characterised by a higher degree of home bias are associated with lower levels of development. On the other hand, markets where foreign investors show a higher degree of allocation preference, relative to the prescribed benchmark (foreign bias), are found to be more developed. The results, which are robust to the use of shock based identification strategy, indicate that policy measures that promote optimal international equity portfolio diversification could be crucial in developing the depth and breadth of domestic stock markets.

ORCID iDs

Kwabi, Frank Obenpong, Thapa, Chandra, Paudyal, Krishna ORCID logoORCID: https://orcid.org/0000-0002-0372-304X and Neupane, Suman;
  • Item type:Article
    ID code:57103
    Dates:
    Date
    Event
    28 January 2019
    Published
    28 January 2019
    Accepted
    26 July 2016
    Submitted
    Keywords:international equity portfolio diversification, equity foreign bias, equity home bias, market integration, stock market development, Accounting, Economics, Econometrics and Finance(all)
    Subjects:Social Sciences > Commerce > Accounting
    Department:Strathclyde Business School > Accounting and Finance
    Depositing user: Pure Administrator
    Date deposited:26 Jul 2016 12:35
    Last modified:01 Nov 2023 11:09
    Related URLs:
    URI:https://strathprints.strath.ac.uk/id/eprint/57103
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