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Transparency and International Investor Behavior

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Author Info
Gaston R. Gelos
Shang-Jin Wei

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Abstract

Does country "transparency" affect international portfolio investment? We examine this and related questions using a unique micro dataset on international portfolio holdings. We employ various indices of government and corporate transparency, focusing on the availability and quality of information. We find that emerging market equity funds hold fewer assets in less transparent countries. Herding among funds is somewhat less prevalent in more transparent countries. During the Asian and Russian crises, emerging market funds withdrew more strongly from less transparent countries after controlling for other risk factors. However, funds tend to react less strongly to news from more opaque markets.

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Paper provided by International Monetary Fund in its series IMF Working Papers with number 02/174.

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Length: 39 pages
Date of creation: 05 Nov 2002
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Handle: RePEc:imf:imfwpa:02/174

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Related research
Keywords: Financial crisis ; Transparency ; Investment ; Emerging markets ; International financial system ;

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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  23. Katharina Pistor & Martin Raiser & Stanislaw Gelfer, 2000. "Law and Finance in Transition Economies," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 8(2), pages 325-368, July. [Downloadable!] (restricted)
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  28. Chang, Roberto & Majnoni, Giovanni, 2002. "Fundamentals, beliefs, and financial contagion," European Economic Review, Elsevier, vol. 46(4-5), pages 801-808, May. [Downloadable!] (restricted)
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