International Portfolio Flows and Security Markets

Working Paper No. 99-3

55 Pages Posted: 17 Apr 1999

See all articles by René M. Stulz

René M. Stulz

Ohio State University (OSU) - Department of Finance; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI)

Date Written: March 1999

Abstract

This paper provides an analysis of the impact of international portfolio flows on security returns. It concludes that opening a country to portfolio flows decreases its cost of capital without adverse effects on its securities markets. There is no convincing evidence that portfolio flows increase the volatility of equity returns, lead to excessive co-movement of a country's equity returns with world equity returns, or destabilize security markets. Though there has been much concern about contagion, existing empirical evidence does not provide conclusive evidence that contagion is economically important for security markets.

JEL Classification: F3, F4, G1

Suggested Citation

Stulz, Rene M., International Portfolio Flows and Security Markets (March 1999). Working Paper No. 99-3, Available at SSRN: https://ssrn.com/abstract=155188 or http://dx.doi.org/10.2139/ssrn.155188

Rene M. Stulz (Contact Author)

Ohio State University (OSU) - Department of Finance ( email )

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United States

HOME PAGE: http://www.cob.ohio-state.edu/fin/faculty/stulz

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European Corporate Governance Institute (ECGI)

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