Offshore investment funds: monsters in emerging markets?

Relative to onshore funds, offshore funds are subject to less taxes and regulation. So they may trade more aggressively and do so in ways that could destabilize the emerging markets. We study the behavior of the offshore funds in Korea and compare them with the onshore funds. Evidence suggests that...

Full description

Saved in:
Bibliographic Details
Published in:Journal of development economics 2002-06, Vol.68 (1), p.205-224
Main Authors: Kim, Woochan, Wei, Shang-Jin
Format: Article
Language:English
Subjects:
Capital market
Crisis
Development economics
Development studies
Economic theory
Emerging markets
Feedback trading
Foreign investment
Herding
Impact analysis
International finance
Investment
Offshore funds
Offshore investing
Securities trading
Studies
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:Relative to onshore funds, offshore funds are subject to less taxes and regulation. So they may trade more aggressively and do so in ways that could destabilize the emerging markets. We study the behavior of the offshore funds in Korea and compare them with the onshore funds. Evidence suggests that they do trade more frequently. However, they do not engage in momentum trading. In contrast, many onshore funds do. Finally, while they engage in herding, the onshore funds do it even more during a crisis. Therefore, it is inappropriate to single out the offshore funds as being especially worrisome.
ISSN:0304-3878
1872-6089
DOI:10.1016/S0304-3878(02)00012-3