Home bias, transactions costs, and prospects for the Euro: a more detailed analysis

Mann, Catherine L. and Meade, Ellen E. (2002) Home bias, transactions costs, and prospects for the Euro: a more detailed analysis. CEPDP (537). London School of Economics and Political Science. Centre for Economic Performance, London, UK. ISBN 0753015552

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Abstract

This paper brings together the literature on determination of home bias in equity holdings and the portfolio balance model of exchange rates to consider whether the dollar might be affected by a change in transactions costs that alters international portfolio allocations. Our empirical findings lend support to the view that transactions costs have a significant influence on US portfolio holdings, even after accounting for float market share. In addition, new survey evidence on the equity holdings of European firms indicates home bias for European investors, and points to a reduction in the magnitude of this home bias since 1997.

Item Type:	Monograph (Discussion Paper)
Official URL:	http://cep.lse.ac.uk
Additional Information:	© 2002 the authors
Divisions:	Centre for Economic Performance
Subjects:	H Social Sciences > HG Finance
JEL classification:	F - International Economics > F3 - International Finance > F31 - Foreign Exchange G - Financial Economics > G1 - General Financial Markets > G11 - Portfolio Choice; Investment Decisions F - International Economics > F2 - International Factor Movements and International Business > F21 - International Investment; Long-Term Capital Movements G - Financial Economics > G1 - General Financial Markets > G15 - International Financial Markets
Date Deposited:	29 Jul 2008 09:23
Last Modified:	13 Sep 2024 19:46
URI:	http://eprints.lse.ac.uk/id/eprint/20076

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