Equity home bias is one of the most enduring puzzles in international finance. In this paper, I start out by documenting a novel stylized fact about home bias: countries with weaker domestic institutions hold fewer foreign assets. I then explore a macroeconomic mechanism by which the presence of...

This paper argues that the 40-year-old Feldstein-Horioka “puzzle” (i.e., in a regression of the domestic investment rate on the domestic saving rate, the estimated coefficient is significantly larger than expected in a world with high capital mobility) should have never been labeled as such....

This paper investigates the effect of reforms of insolvency regulations on cross-border debt and equity investments at a sectoral level. Using disaggregated data from the Securities Holdings Statistics by Sector (SHSS) and OECD-indicators on the efficiency of insolvency regulations, we find...

This study relates financial integration to credit risk of banks in a panel of countries. Over the period of study, we compute measures of financial integration for a panel of banks and examine how they relate to the credit risk of borrowing banks. The result of an instrumental variable approach...

While recent literature has depicted status as an intangible asset that is firm-specific and mobile, we have a limited understanding of whether status confers advantage in a way similar to other intangible assets. This study examines the macro-structural contingencies that influence the marginal...

This paper examines the presence and the determinants of exchange risk premia in stock returns using firm level data from South Korea. We conduct empirical asset pricing tests based on cross-sectional data sorted by firm characteristics such as firm size, liquidity, foreign ownership, and...

At the end of fiscal year 2013, the level of investment held by U.S.- based businesses and individuals in assets abroad was US$ 21.9 trillion, and the position held by foreign-based counterparties in the U.S. $ 26.5 trillion (B.E.A., 2014). With volumes that exceed 30% of the world GDP (World...

This paper is motivated by the unparalleled increase in foreign direct investment to emerging market economies of the last 25 years. Using a large cross-country time-series data set, we evaluate the dependence of foreign direct investment on global factors, or worldwide sources of risk (i.e.,...

In this paper, we conduct an analysis of the implications of capital controls for financial stability. We study a financial transaction (Tobin) tax applicable to cross-border capital flows in a multi-good, multi-country dynamic equilibrium model with incomplete financial markets and...

Emerging market corporations have significantly increased their borrowing in international markets after the global financial crisis. We show that this expansion was led by large-denomination bond issuances (bonds with face values exceeding US$300 million, and often exceeding US$500 million)....