Working Paper: CEPR ID: DP4476
Authors: R. Gaston Gelos; Shangjin Wei
Abstract: Does country transparency affect international portfolio investment? We examine this question by constructing new measures of transparency and by making use of a unique micro dataset on portfolio holdings of emerging market funds around the world. We distinguish between government and corporate transparency. There is clear evidence that funds invest systematically less in less transparent countries. There is also some evidence that during crises, funds flee from non-transparent countries to a greater extent.
Keywords: international portfolio investment; opacity
JEL Codes: I20
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| government opacity (D73) | investment levels (F21) |
| financial crises + government opacity (H12) | capital flight (F21) |
| government opacity + crisis dummies (H12) | investment flows (F21) |
| lagged measures of opacity (C29) | investment decisions (G11) |
| transparency reforms (G38) | changes in investment behavior (G31) |