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Foreign portfolio investment patterns: evidence from a gravity model

Author

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  • Lei Pan

    (Curtin University)

  • Rong Hu

    (Dongbei University of Finance and Economics)

  • Qingyuan Du

    (Monash University)

Abstract

Cross-country capital flows have been widely studied in the literature; however, why some countries may form more similar foreign investment portfolios than others has not been investigated. Using data for a broad panel of countries during the period 2002–2015, we adopt gravity equations to estimate cross-country foreign portfolio investment patterns. The main empirical results reveal that countries are more likely to form similar foreign portfolio investment patterns if: (i) countries are geographically closer; (ii) countries share the same official language; and (iii) countries adopt fixed exchange rate regimes.

Suggested Citation

  • Lei Pan & Rong Hu & Qingyuan Du, 2022. "Foreign portfolio investment patterns: evidence from a gravity model," Empirical Economics, Springer, vol. 63(1), pages 391-415, July.
    • Handle: RePEc:spr:empeco:v:63:y:2022:i:1:d:10.1007_s00181-021-02133-0
    DOI: 10.1007/s00181-021-02133-0
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    References listed on IDEAS

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