Both causes are the result of the eurozone's dysfunctional banking system, in which demand for safe assets involves both a "home bias
" and a strong demand for core countries' sovereign debt.
A UK investor may be largely invested in UK stocks because these are businesses which we can feel, touch and thus understand - this is sometimes referred to as "home bias
This is commonly referred to as a "Home Bias
." With the recent outperformance in returns of domestic vs.
Yet many individuals still exhibit home bias
. For instance, despite the potential loss of performance and higher risk, 54 per cent of our Swiss clients who are active investors, still hold more than half of their assets in Swiss companies (UBS Global Wealth Management data).
Results show that in the absence of home bias
, RMB should be overvalued against its balanced level, however, the misalignment rate does not exceed a certain level to sustain the internationalization of RMB.
The main assumption of the model is that the existence of a home bias
leads home teams to allocate more offensive resources in the field to the detriment of their defensive capacity in order to satisfy followers.
investors should at least consider to what degree "home bias
" plays a role in their allocations now.
The same quantitative discipline that the Chief Investment Office applies to investments has proven useful in successfully looking beyond a home bias
in portfolios and sports events."
In practice, costs often are not minimized because of a strong "home bias
" that leads contracts to be awarded to local companies.
Riff and Yagil (2016) reveal that the market anomaly of home bias
is a violation of what the international portfolio theory advocates as optimal.
This would provide a fairly complete framework to foster financial integration, which is needed to counter the home bias
of banks that has risen massively during the crisis.