Information and capital flows revisited: The Internet as a determinant of transactions in financial assets

Changkyu Choi; Dong Eun Rhee; Yonghyup Oh

doi:10.1016/j.econmod.2014.03.027

Information and capital flows revisited: The Internet as a determinant of transactions in financial assets

Changkyu Choi, Dong Eun Rhee, Yonghyup Oh

Research output: Contribution to journal › Article › peer-review

24 Citations (Scopus)

Abstract

We extend Portes et al. (2001) by introducing the Internet as a variable, and we test the model empirically by using cross-country panel data on portfolio flows between the United States and other countries from 1990 to 2008. Asymmetric information accounts for the strong negative relationship between international asset transactions and distance. The Internet plays an important role in mitigating information asymmetry between countries and increases the volume of cross-border portfolio flows.

Original language	English
Pages (from-to)	191-198
Number of pages	8
Journal	Economic Modelling
Volume	40
DOIs	https://doi.org/10.1016/j.econmod.2014.03.027
Publication status	Published - 2014 Jun
Externally published	Yes

Bibliographical note

Funding Information:
Distance : the distance between New York and the financial center of a foreign country from Portes, Rey, and Oh (2001) and Shang-JinWei Web site ( http://www.ksg.harvard.edu/people/sjwei ). GDP : World Development Indicator (2009), World Bank. English language dummy : 1 for English speaking countries, 0 otherwise; Australia, Canada, Hong Kong, India, Ireland, Singapore, South Africa, United Kingdom. Financial Skill : 1–7, higher value implies improved financial skill, World Competitiveness Yearbook , IMD. The original Financial Skill data have different scales by periods: the data for 1993–1995 have values from 1 to 10, the data for 1996 have values from 1 to 6, and the data for 1997 to the present have values from 1 to 7. Thus, the data before 1997 are rescaled to have values from 1 to 7. Also, missing values are replaced by nearest figures. Telephone traffic : time of international outgoing telephone traffic of that country from the International Telecommunication Union. Internet users : number of Internet users per 100 people, from the World Development Indicator (2008), World Bank. A.3

Keywords

Cross-border portfolio flows
Gravity equation
Home bias
Information asymmetries
The Internet

ASJC Scopus subject areas

Economics and Econometrics

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10.1016/j.econmod.2014.03.027

Cite this

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title = "Information and capital flows revisited: The Internet as a determinant of transactions in financial assets",

abstract = "We extend Portes et al. (2001) by introducing the Internet as a variable, and we test the model empirically by using cross-country panel data on portfolio flows between the United States and other countries from 1990 to 2008. Asymmetric information accounts for the strong negative relationship between international asset transactions and distance. The Internet plays an important role in mitigating information asymmetry between countries and increases the volume of cross-border portfolio flows.",

keywords = "Cross-border portfolio flows, Gravity equation, Home bias, Information asymmetries, The Internet",

author = "Changkyu Choi and Rhee, {Dong Eun} and Yonghyup Oh",

note = "Funding Information: Distance : the distance between New York and the financial center of a foreign country from Portes, Rey, and Oh (2001) and Shang-JinWei Web site ( http://www.ksg.harvard.edu/people/sjwei ). GDP : World Development Indicator (2009), World Bank. English language dummy : 1 for English speaking countries, 0 otherwise; Australia, Canada, Hong Kong, India, Ireland, Singapore, South Africa, United Kingdom. Financial Skill : 1–7, higher value implies improved financial skill, World Competitiveness Yearbook , IMD. The original Financial Skill data have different scales by periods: the data for 1993–1995 have values from 1 to 10, the data for 1996 have values from 1 to 6, and the data for 1997 to the present have values from 1 to 7. Thus, the data before 1997 are rescaled to have values from 1 to 7. Also, missing values are replaced by nearest figures. Telephone traffic : time of international outgoing telephone traffic of that country from the International Telecommunication Union. Internet users : number of Internet users per 100 people, from the World Development Indicator (2008), World Bank. A.3 ",

year = "2014",

month = jun,

doi = "10.1016/j.econmod.2014.03.027",

language = "English",

volume = "40",

pages = "191--198",

journal = "Economic Modelling",

issn = "0264-9993",

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T2 - The Internet as a determinant of transactions in financial assets

AU - Choi, Changkyu

AU - Rhee, Dong Eun

AU - Oh, Yonghyup

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PY - 2014/6

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AB - We extend Portes et al. (2001) by introducing the Internet as a variable, and we test the model empirically by using cross-country panel data on portfolio flows between the United States and other countries from 1990 to 2008. Asymmetric information accounts for the strong negative relationship between international asset transactions and distance. The Internet plays an important role in mitigating information asymmetry between countries and increases the volume of cross-border portfolio flows.

KW - Cross-border portfolio flows

KW - Gravity equation

KW - Home bias

KW - Information asymmetries

KW - The Internet

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ER -

Information and capital flows revisited: The Internet as a determinant of transactions in financial assets

Abstract

Bibliographical note

Keywords

ASJC Scopus subject areas

Access to Document

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