Working Paper: NBER ID: w9260
Authors: R. Gaston Gelos; Shangjin Wei
Abstract: Does country transparency affect international portfolio investment? We examine this and related questions using some new measures of transparency and a unique micro dataset on international portfolio holdings. We distinguish between government and corporate transparency. There is clear evidence that international funds invest systematically less in less transparent countries. On the other hand, herding among funds tends to be more prevalent in less transparent countries. There is also some evidence that during crises, funds flee non-transparent countries by a greater amount.
Keywords: No keywords provided
JEL Codes: F30; D80; G10; G30
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| low transparency (L15) | international investment (F21) |
| low transparency (L15) | herding behavior among international investors (C92) |
| low transparency (L15) | responsiveness of investors to news about country fundamentals (G15) |
| low transparency (L15) | flight-to-quality behavior of funds (G41) |