“Financial education, investor protection and international portfolio diversification”

by Maela Giofrè, Journal of International Money and Finance, 71 (2017), 111–139Abstract
This paper investigates the effect of financial education on foreign portfolio investment. We show that higher investor financial education fosters international diversification, and that its role is particularly pronounced where information problems and monitoring costs are likely to be more severe, that is, in countries where protection of minority shareholders’ rights is weaker.
We interpret this evidence as supportive of the conjecture that financial education lessens the informational constraints binding foreign investors.

This work has been realized for the Netspar Theme grant project “Evidence and Implications For Retirement Planning, Saving Behavior, and Financial Education Programs”, for which CeRP received funding from Netspar in 2011.

The article is available at