Home Bias and International Diversification
March 26, 2015Macro, Trade, and Finance Seminar Series

Geert Bekaert (Columbia) will share the results of his most recent research.

Speaker: Geert Bekaert (Columbia University) More >>

Abstract: We examine the international equity allocations of over 3 million individuals in 296 401(k) plans over the 2006-2011 period. These allocations show enormous cross-individual variation, ranging between zero and over 75%, as well as an upward trend that is only partially accounted for by the slight decrease in importance of the US market relative to the world market. International equity allocations also display strong cohort effects, with younger cohorts investing more internationally than older ones, but also each cohort investing more internationally over time. This finding suggests that the home bias phenomenon may slowly disappear over time. Worker’s salary has a positive effect on international allocations, while account balance has a negative one, but these effects are not economically large. Education, financial literacy and the fraction of foreign-born population measured at the zip code level have strong positive effects on international diversification, consistent with familiarity and information stories. In addition, states with more exports have higher international allocations.

Paper: Who is Internationally Diversified? Evidence from 296 401(k) Plans

This talk held jointly with the International Monetary Fund.


Last Updated: Mar 19, 2015

The Macro, Trade, and Finance Seminar Series is a weekly series hosted by the World Bank's research department. The series invites leading researchers from the fields of macroeconomics, growth, trade, international integration, and finance to present the results of their most recent research in a seminar format. The full list of seminars can be viewed here.

Event Details
  • Date: March 26, 2015
  • Location: World Bank Main Complex, MC9-100
  • Time: 12:30 - 2:00 p.m.
  • CONTACT: Shweta Mesipam