The Patterns of cross-border portfolio investments in the GCC region: do institutional quality and the number of expatriates play a role?

Faruk Balli, Rosmy J. Louis and Muhammed Osman

MPRA Paper from University Library of Munich, Germany

Abstract: In this paper, we document the determinants of portfolio investments to Gulf Cooperation Council (GCC) economies by bringing up the role played by market forces, cultural anities, and institutional quality. We classify the GCC economies as host to 35 countries as per the Coordinated Portfolio Investment Surveys (CPIS) of the IMF for the period 2001- 2006. Using the CPIS data and data from various other reliable sources and appropriate panel data analysis techniques, we find a number of interesting results: 1) the relatively higher quality of institutional set up in GCC in comparison to other countries; 2) the relative volume of expatriates across source countries in GCC soil; and 3) bilateral factors such as trade linkages between GCC and source countries, all statistically and significantly explain portfolio investments to the GCC region. Additionally, we uncover the existence of a portfolio GCC bias". That is, GCC investors exhibit a strong preference towards their own markets when allocating their cross border nancial asset holdings.

Keywords: International Portfolio Allocation; GCC; Bilateral Linkage; Institutional Quality; Expatriates. (search for similar items in EconPapers)
JEL-codes: E44 F21 F36 (search for similar items in EconPapers)
Date: 2009-01-01, Revised 2010-11-01
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Citations: View citations in EconPapers (2)

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Related works:
Journal Article: The patterns of cross-border portfolio investments in the GCC region: do institutional quality and the number of expatriates play a role? (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:19966

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