DP4476 Transparency and International Portfolio Holdings

Author(s):	Gaston Gelos, Shang-Jin Wei
Publication Date:	July 2004
Keyword(s):	international portfolio investment, opacity
JEL(s):	I20
Programme Areas:	Financial Economics, Transition Economics, Institutions and Economic Performance
Link to this Page:	cepr.org/active/publications/discussion_papers/dp.php?dpno=4476

Does country transparency affect international portfolio investment? We examine this question by constructing new measures of transparency and by making use of a unique micro dataset on portfolio holdings of emerging market funds around the world. We distinguish between government and corporate transparency. There is clear evidence that funds invest systematically less in less transparent countries. There is also some evidence that during crises, funds flee from non-transparent countries to a greater extent.