This paper examines how the financial globalization affects international equity mutual funds' portfolio choices in emerging markets. By examining the monthly holdings of 155 international funds, we first show that these funds actively engage in a rebalancing strategy to maintain their risk...

Using static panel regression and dynamic local projection methods, we find that financial integration magnifies the transmission of global financial shocks to emerging market economies with fixed exchange rates, validating the insulation benefits of floating regimes and market segmentation