HCBE Faculty Articles

Title

Threats to Foreign Equity Investments in International Capital Markets: Nationalism and Militarism

Document Type

Article

Date

2013

Publication Title

Review of Pacific Basin Financial Markets and Policies

ISSN or ISBN

0219-0915

Volume

16

Issue

3

First Page

1

Last Page

16

Description

Even though financial markets have become more integrated and international capital now moves more freely across borders, we argue that access to foreign equity investments still remains a political decision, and this policy decision is a function of the country's nationalistic and militaristic sentiments. We use military spending as a proxy for militarism and nationalism, and show that countries with high militaristic sentiments have lower foreign equity investments. We also look at bilateral equity flows and find that a pair of countries simultaneously having greater increases in militarism has lower bilateral equity investments.

DOI

10.1142/S0219091513500185

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