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That's Where The Money Was: Foreign Bias and English Investment Abroad, 1866-1907

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  • BenjaminR. Chabot
  • ChristopherJ. Kurz

Abstract

Why did Victorian Britain send so much capital abroad? We collect over 500,000 monthly British and foreign security returns between 1866 and 1907 and investigate the effect of international diversification on Victorian investors' portfolios. This is the first study to use nineteenth-century data that is both broad enough and sampled at a high enough frequency to examine if foreign assets expanded the mean-variance efficient frontier of British investors and how valuable this expansion was in terms of utility. We find that foreign assets significantly expanded the mean-variance frontier and resulted in utility gains equivalent to large increases in wealth. Copyright © The Author(s). Journal compilation © Royal Economic Society 2010.

Suggested Citation

  • BenjaminR. Chabot & ChristopherJ. Kurz, 2010. "That's Where The Money Was: Foreign Bias and English Investment Abroad, 1866-1907," Economic Journal, Royal Economic Society, vol. 120(547), pages 1056-1079, September.
  • Handle: RePEc:ecj:econjl:v:120:y:2010:i:547:p:1056-1079
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    Cited by:

    1. Grossman, Richard, 2017. "Stocks for the Long Run: New Monthly Indices of British Equities, 1869-1929," CEPR Discussion Papers 12121, C.E.P.R. Discussion Papers.
    2. Chambers, David & Esteves, Rui, 2014. "The first global emerging markets investor: Foreign & Colonial Investment Trust 1880–1913," Explorations in Economic History, Elsevier, vol. 52(C), pages 1-21.
    3. Crafts, Nicholas, 2011. "British Relative Economic Decline Revisited," CEPR Discussion Papers 8384, C.E.P.R. Discussion Papers.
    4. Acheson, Graeme G. & Campbell, Gareth & Turner, John D., 2016. "Common law and the origin of shareholder protection," eabh Papers 16-03, The European Association for Banking and Financial History (EABH).
    5. Acheson, Graeme G. & Campbell, Gareth & Turner, John D., 2015. "Who financed the expansion of the equity market? Shareholder clienteles in Victorian Britain," QUCEH Working Paper Series 15-07, Queen's University Belfast, Queen's University Centre for Economic History.
    6. Goetzmann, Will & Le Bris, David & Pouget, Sébastien, 2017. "The Present Value Relation Over Six Centuries: The Case of the Bazacle Company," TSE Working Papers 17-794, Toulouse School of Economics (TSE).
    7. Crafts, Nicholas, 2012. "British relative economic decline revisited: The role of competition," Explorations in Economic History, Elsevier, vol. 49(1), pages 17-29.
    8. Burhop, Carsten & Chambers, David & Cheffins, Brian, 2014. "Regulating IPOs: Evidence from going public in London, 1900–1913," Explorations in Economic History, Elsevier, vol. 51(C), pages 60-76.

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