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Investing at Home and Abroad: Different Costs, Different People?

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Author Info
Dimitrios Christelis () (University of Salerno and CSEF)
Dimitris Georgarakos (Goethe University Frankfurt and CFS)

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Abstract

We investigate US households’ direct investment in stocks, bonds and liquid accounts and their foreign counterparts, in order to identify the different participation hurdles affecting asset investment domestically and overseas. To this end, we estimate a trivariate probit model with three further selection equations that allows correlations among unobservables of all possible asset choices. Our results point to the existence of a second hurdle that stock owners need to overcome in order to invest in foreign stocks. On the other hand, we find little evidence for additional pecuniary or informational costs associated with investment in foreign bonds and liquid accounts.

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Publisher Info
Paper provided by Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy in its series CSEF Working Papers with number 188.

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Date of creation: 01 Jan 2008
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Handle: RePEc:sef:csefwp:188

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Related research
Keywords: Multivariate probit; simulated maximum likelihood; selection; household finance; foreign assets; stockholding;

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  1. Arie Kapteyn & Federica Teppa, 2009. "Subjective Measures of Risk Aversion, Fixed Costs, and Portfolio Choice," DNB Working Papers 216, Netherlands Central Bank, Research Department. [Downloadable!]
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