Biases in international portfolio allocation and investor protection standards

Frank O. Kwabi, Chandra Thapa, Krishna Paudyal, Emmnuel Adegbite

Research output: Contribution to journalArticlepeer-review

3 Citations (Scopus)
22 Downloads (Pure)


Economic reasoning suggests that financial globalization that encourages optimal international portfolio investments should improve investor protection standards (IPS) of a country. In practice, however, investors manifest varying degrees of suboptimal international portfolio allocations. Using a panel dataset covering 44 countries spanning over 15 years we examine whether suboptimal equity portfolio allocation in part is associated with the cross-country variations in IPS. Consistent with economic reasoning we find robust indications that international portfolio allocation may play an important role in the development of IPS. More specifically, the quality of IPS improves with higher degrees of optimal international equity portfolio allocation of domestic and foreign investors.
Original languageEnglish
Pages (from-to)66-79
Number of pages14
JournalInternational Review of Financial Analysis
Early online date9 Sep 2017
Publication statusPublished - 1 Oct 2017


  • financial globalization
  • investor protection standards
  • equity home bias
  • equity foreign bias


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