Financial Education, Investor Protection and International Portfolio Diversification

Forthcoming in Journal of International Money and Finance

43 Pages Posted: 31 Jul 2012 Last revised: 2 Feb 2017

See all articles by Maela Giofré

Maela Giofré

University of Turin - Department of Economics and Statistics; CeRP-CCA; Netspar

Date Written: September 2016

Abstract

This paper investigates the effect of financial education on foreign portfolio investment. We show that higher investor financial education fosters international diversification, and that its role is particularly pronounced where information problems and monitoring costs are likely to be more severe, that is, in countries where protection of minority shareholders' rights is weaker.

We interpret this evidence as supportive of the conjecture that financial education lessens the informational constraints binding foreign investors.

Keywords: Financial education, home bias, international portfolio investments, investor protection legislation

JEL Classification: G11, G15, G30

Suggested Citation

Giofré, Maela, Financial Education, Investor Protection and International Portfolio Diversification (September 2016). Forthcoming in Journal of International Money and Finance, Available at SSRN: https://ssrn.com/abstract=2119870 or http://dx.doi.org/10.2139/ssrn.2119870

Maela Giofré (Contact Author)

University of Turin - Department of Economics and Statistics ( email )

Lungo Dora Siena 100/A
Torino, Turin - Piedmont 10153
Italy

CeRP-CCA ( email )

Via Real Collegio 30
Moncalieri (TO), Turin 10024
Italy

Netspar ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

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