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International diversification: Households versus institutional investors

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  • Giofré, Maela

Abstract

Directly investing households exhibit more domestically concentrated portfolios than institutional investors. We aim to identify the factors that asymmetrically affect the foreign equity portfolios held by households and institutional investors in four European investing countries – France, Italy, Spain, and Sweden. We find that transparency and being listed on a common exchange platform such as Euronext have larger effects on households’ portfolio decisions than on those of institutional investors. Policies encouraging transparency and common, standardized trading rules can therefore be particularly effective in helping households to better internationally diversify their portfolios.

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Article provided by Elsevier in its journal The North American Journal of Economics and Finance.

Volume (Year): 26 (2013)
Issue (Month): C ()
Pages: 145-176

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Handle: RePEc:eee:ecofin:v:26:y:2013:i:c:p:145-176

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Web page: http://www.elsevier.com/locate/inca/620163

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Keywords: Portfolio choice; International diversification; Household finance; Investor's sophistication;

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