Citation

Discussion Paper Details

Please find the details for DP11990 in an easy to copy and paste format below:

Full Details   |   Bibliographic Reference

Full Details

Title: Inefficient Globalization of Finance: Evidence from Marketing-Oriented Overseas Expansions of Low-Skilled Mutual Fund Families

Author(s): Si Cheng, Massimo Massa and Hong Zhang

Publication Date: April 2017

Keyword(s): Cross-border capital flows, Globalization of finance, Market Efficiency and Mutual funds

Programme Area(s): Financial Economics

Abstract: We study how the globalization of finance may unintendedly reduce market efficiency through low-skilled financial institutions. Particularly, it may allow these companies to achieve product differentiation by launching new products for ‚??marketing‚?? purposes rather than for the goal of improving investor welfare or market efficiency. Using a complete sample of global mutual funds, we find that low-skill fund companies are more likely to launch new funds that track less-explored foreign equity market indices. However, these new funds typically deliver lower returns and lower diversification benefits. The associated cross-border capital flows reduce price efficiency and liquidity.

For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=11990

Bibliographic Reference

Cheng, S, Massa, M and Zhang, H. 2017. 'Inefficient Globalization of Finance: Evidence from Marketing-Oriented Overseas Expansions of Low-Skilled Mutual Fund Families'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=11990