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Information and Capital Flows Revisited: The Internet as a Determinant of Transactions in Financial Assets

Author

Listed:
  • Changkyu Choi

    (Myongji University)

  • Dong-Eun Rhee

    (Korea Institute for International Economic Policy)

  • Yonghyup Oh

    (Korea Institute for International Economic Policy)

Abstract

This paper investigates the determinants of international transactions in financial assets empirically. We extend the gravity model in Portes et al. (2000) by introducing an internet variable. Using cross-country panel data on the portfolio flows between the US and other countries from 1990 to 2008, we found that the Internet turns out to mitigate the information asymmetries and thus increases cross-border portfolio flows between countries.

Suggested Citation

  • Changkyu Choi & Dong-Eun Rhee & Yonghyup Oh, 2010. "Information and Capital Flows Revisited: The Internet as a Determinant of Transactions in Financial Assets," Working Papers 10-10, Korea Institute for International Economic Policy.
    • Handle: RePEc:ris:kiepwp:2010_010
    DOI: 10.2139/ssrn.2489832
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    2. Gnangnon, Sèna Kimm & Iyer, Harish, 2018. "Does bridging the Internet Access Divide contribute to enhancing countries' integration into the global trade in services markets?," Telecommunications Policy, Elsevier, vol. 42(1), pages 61-77.
    3. Dhahri, Sabrine & Omri, Anis & Mirza, Nawazish, 2024. "Information technology and financial development for achieving sustainable development goals," Research in International Business and Finance, Elsevier, vol. 67(PA).
    4. Shijun Chai & Li Zhou & Yang Chen, 2023. "Digital Finance and Entrepreneurial Return Rate: Effects, Mechanisms and Inequality," SAGE Open, , vol. 13(4), pages 21582440231, October.
    5. Afonso, António & Alves, José & Beck, Krzysztof & Jackson, Karen, 2024. "Financial, institutional, and macroeconomic determinants of cross-country portfolio equity flows: The case of developed countries," Economic Modelling, Elsevier, vol. 141(C).
    6. Rogelio V. Mercado, 2023. "Bilateral capital flows: Gravity, push and pull," International Finance, Wiley Blackwell, vol. 26(1), pages 36-63, April.
    7. Nkoumou Ngoa, Gaston Brice & Song, Jacques Simon, 2021. "Female participation in African labor markets: The role of information and communication technologies," Telecommunications Policy, Elsevier, vol. 45(9).
    8. Joel Cariolle & Maëlan Le Goff & Olivier Santoni, 2017. "Telecommunications submarine cable vulnerability and local performance of firms in developing and transition countries," Post-Print hal-01569846, HAL.
    9. António Afonso & Krzysztof Beck & Karen Jackson, 2022. "Determinants of stock market correlations. Accounting for model uncertainty and reverse causality in a large panel setting," Working Papers REM 2022/0246, ISEG - Lisbon School of Economics and Management, REM, Universidade de Lisboa.
    10. Kangyi Li & Yang Zhou, 2024. "Improved Financial Predicting Method Based on Time Series Long Short-Term Memory Algorithm," Mathematics, MDPI, vol. 12(7), pages 1-17, April.
    11. Ying Lu & Mahmood Ahmad & Haotian Zhang & Jingxian Guo, 2024. "Effects of Science and Technology Finance on Green Total Factor Productivity in China: Insights from an Empirical Spatial Durbin Model," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(2), pages 7280-7306, June.
    12. Mercado, Rogelio V., 2023. "Bilateral capital flows: Transaction patterns and gravity," International Review of Economics & Finance, Elsevier, vol. 84(C), pages 39-54.
    13. Owusu-Agyei, Samuel & Okafor, Godwin & Chijoke-Mgbame, Aruoriwo Marian & Ohalehi, Paschal & Hasan, Fakhrul, 2020. "Internet adoption and financial development in sub-Saharan Africa," Technological Forecasting and Social Change, Elsevier, vol. 161(C).
    14. Pengfei Zhou & Mengyu Han & Yang Shen, 2023. "Impact of Intelligent Manufacturing on Total-Factor Energy Efficiency: Mechanism and Improvement Path," Sustainability, MDPI, vol. 15(5), pages 1-22, February.
    15. Pinar, Mehmet & Volkan, Engin, 2018. "Institutions and information flows, and their effect on capital flows," Information Economics and Policy, Elsevier, vol. 43(C), pages 34-47.

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    Keywords

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    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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