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The role of education in equity portfolios during the recent financial crisis

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  • Udichibarna Bose
  • Ronald MacDonald
  • Serafeim Tsoukas

Abstract

Using a panel of 38 economies, over the period 2001 to 2010, we analyse the link between diversification in equity portfolios and different facets of education. We find that traditionally used measures of education play an important role in reducing equity home bias. After separating countries according to their level of financial development, we find that less developed economies tend to benefit more from an improvement in the level of education compared to their more developed counterparts. We also find that the beneficial effect of education is more pronounced during the most recent financial crisis, especially for economies with less developed financial markets.

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  • Udichibarna Bose & Ronald MacDonald & Serafeim Tsoukas, 2014. "The role of education in equity portfolios during the recent financial crisis," Working Papers 2014_17, Business School - Economics, University of Glasgow.
  • Handle: RePEc:gla:glaewp:2014_17
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    Keywords

    Home bias; Equity markets; International diversification; Education; Financial crisis;

    JEL classification:

    • F30 - International Economics - - International Finance - - - General
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)

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