Information is power: How geography shapes international equity flows
The study looked at how money moves between countries in the form of investments in stocks. They found that the size of the markets in both countries, along with trading costs, play a big role in these transactions. Factors like distance and information also affect how much money moves between countries. The study showed that the flow of money is mainly influenced by how information is shared between countries, rather than just trying to spread out risk by investing in different places.