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A Gravity Model of Geopolitics and Financial Fragmentation

Mr. Mario CatalanMr. Salih FendogluTomohiro Tsuruga

出版	International Monetary Fund, 2024-09-13
ISBN	9798400280337
URL	http://books.google.com.hk/books?id=jS4jEQAAQBAJ&hl=&source=gbs_api
EBook	SAMPLE

註釋

Do geopolitical tensions between countries influence the cross-border asset allocation of investment funds? Our answer is yes. We estimate gravity models and find that investment funds allocate smaller shares of their portfolios to recipient countries that are geopolitically more distant to their country of origin—with geopolitical distance measured by dissimilarity in countries’ voting behavior in the United Nations General Assembly. We also find an investment diversion effect: a recipient country attracts additional investments when its source countries get geopolitically more distant to third-party countries. These results are robust to instrumenting geopolitical distance and using alternative distance measures.