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This work investigates how cultural factors and information asymmetries affect foreign portfolio investment decisions.

The role of culture in mitigating information asymmetries in portfolio choice decisions

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This analysis examines how cultural factors influence investment choices, revealing key biases in portfolio decisions.

This work investigates how cultural factors and information asymmetries affect foreign portfolio investment decisions.
Analyzed data from 10,205 country pairs between 2014-2019
Developed a novel indicator for information asymmetries using financial secrecy data
Assessed effects of cultural proximity, focusing on religious ties and global financial centres
Foreign portfolio investment decisions decline with increased information asymmetries
Religious proximity enhances trust, increasing willingness to invest abroad
Identified a financial centre bias where countries with these centres attract more reciprocal investment

Ioannou et al. (2025) studied this question.

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