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Liberalism and Home Equity Bias

26 Pages Posted: 11 Jan 2009 Last revised: 4 May 2009

Evangelos Benos

University of Illinois at Urbana-Champaign

Marek Jochec

Graduate School of Business, Nazarbayev University

Date Written: January 9, 2009

Abstract

Countries whose citizens have liberal ideals are less biased toward domestic equity. Data from 30 countries suggests that economic as well as social liberalism is associated with proportionally higher foreign equity holdings. A one standard deviation increase in the level of economic (social) liberalism relative to time-series and cross-sectional averages, is associated with a 5% (2%) relative decrease of home equity bias. These results hold after controlling for standard rational and behavioral explanations of the home equity bias as well as country and time fixed effects.

Keywords: HEB, home equity bias, liberalism

JEL Classification: G15, G19

Suggested Citation

Benos, Evangelos and Jochec, Marek, Liberalism and Home Equity Bias (January 9, 2009). Available at SSRN: https://ssrn.com/abstract=1325857 or http://dx.doi.org/10.2139/ssrn.1325857

Evangelos Benos

University of Illinois at Urbana-Champaign ( email )

601 E John St
Champaign, IL 61820
United States

Marek Jochec (Contact Author)

Graduate School of Business, Nazarbayev University ( email )

53 Kabanbay Batyra Avenue
Astana, 010000
Kazakhstan

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