Investing at home and abroad: different costs, different people?

Christelis, D. and Georgarakos, D. (2013) Investing at home and abroad: different costs, different people? Journal of Banking and Finance, 37(6), pp. 2069-2086. (doi: 10.1016/j.jbankfin.2013.01.019)

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We investigate US households’ direct investment in stocks, bonds and liquid accounts and their foreign counterparts, in order to identify the different participation hurdles affecting asset investment domestically and overseas. To this end, we estimate a trivariate probit model with three further selection equations that allows correlations among unobservables of all possible asset choices. Our results point to the existence of a second hurdle that stock owners need to overcome in order to invest in foreign stocks. On the other hand, we find little evidence for additional pecuniary or informational costs associated with investment in foreign bonds and liquid accounts.

Item Type:Articles
Additional Information:Christelis acknowledges support by the European Union under Contract HPRN-CT-2002-00235 (Economics of Aging in Europe – AGE). Georgarakos acknowledges partial financial support by the Center for Financial Studies (CFS) under the Research Program ‘Household Wealth Management’.
Glasgow Author(s) Enlighten ID:Georgarakos, Professor Dimitris and Christelis, Professor Dimitris
Authors: Christelis, D., and Georgarakos, D.
College/School:College of Social Sciences > Adam Smith Business School > Economics
Journal Name:Journal of Banking and Finance
ISSN (Online):1872-6372
Published Online:05 February 2013

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