Investing at Home and Abroad: Different Costs, Different People?

University of Salerno, CSEF Working Paper No. 188

52 Pages Posted: 6 Mar 2008 Last revised: 13 Apr 2011

See all articles by Dimitris Christelis

Dimitris Christelis

Centre for Studies in Economics and Finance (CSEF), University of Naples Federico II; Center for Financial Studies (CFS); ARC Centre of Excellence in Population Ageing Research (CEPAR); Netspar

Dimitris Georgarakos

European Central Bank (ECB) - Directorate General Research; Center for Financial Studies (CFS)

Multiple version iconThere are 2 versions of this paper

Date Written: April 11, 2011

Abstract

We investigate US households’ direct investment in stocks, bonds and liquid accounts and their foreign counterparts, in order to identify the different participation hurdles affecting asset investment domestically and overseas. To this end, we estimate a trivariate probit model with three further selection equations that allows correlations among unobservables of all possible asset choices. Our results point to the existence of a second hurdle that stock owners need to overcome in order to invest in foreign stocks. On the other hand, we find little evidence for additional pecuniary or informational costs associated with investment in foreign bonds and liquid accounts.

Keywords: Foreign assets, household finance, stockholding, multivariate probit, simulated maximum likelihood, selection.

JEL Classification: C35, D14, G11, G15

Suggested Citation

Christelis, Dimitris and Georgarakos, Dimitris, Investing at Home and Abroad: Different Costs, Different People? (April 11, 2011). University of Salerno, CSEF Working Paper No. 188. Available at SSRN: https://ssrn.com/abstract=1086040 or http://dx.doi.org/10.2139/ssrn.1086040

Dimitris Christelis (Contact Author)

Centre for Studies in Economics and Finance (CSEF), University of Naples Federico II ( email )

Via Cintia, Monte S. Angelo
Naples, NA 80126
Italy

Center for Financial Studies (CFS) ( email )

Grüneburgplatz 1
Frankfurt am Main, 60323
Germany

ARC Centre of Excellence in Population Ageing Research (CEPAR) ( email )

Australian School of Business
Ground Floor, East Wing UNSW Kensington Campus
Sydney, New South Wales NSW 2052
Australia
+61 (2) 9931 9202 (Phone)

HOME PAGE: http://www.cepar.edu.au

Netspar ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Dimitris Georgarakos

European Central Bank (ECB) - Directorate General Research ( email )

Sonnemannstrasse 20
Frankfurt am Main, 60314
Germany

Center for Financial Studies (CFS) ( email )

Grüneburgplatz 1
Frankfurt am Main, 60323
Germany

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