Abstract
The comparative analysis of the main approaches to the reasons for the home bias is explored. The main factors of home bias are identified. The reasons for the existence of home bias are determined on the basis of systematization of the existing discourse. The main stages of the evolution of approaches to determining the reasons for home bias are identified. It was found that the most promising approach is the behaviourist approach, as well as the institutional approach and the transaction costs approach. The historical and current dynamics of the home bias in the investment portfolios of different countries is studied. A comparative analysis of the home bias for different groups of countries according to their level of economic development is carried out. It was found that developed countries have the lowest share of local market assets in the portfolio. The evolution of approaches to the home bias has been studied. The main scientific publications on the issue of home bias in the historical perspective are analysed and systematized. The main quantitative dimensions of the expression of home bias are highlighted. The main forms of quantitative expression of home bias, which received relative expression in the form of indices, are studied. The qualitative and quantitative composition of modern investment portfolios of the countries with the largest shares in the world market capitalization is studied and analysed. It has been found that there are countries with traditionally low and high levels of international diversification, such as China and Luxembourg, respectively.
Highlights
The modern portfolio theory of international investments has a long history of development, during which it has been transformed and improved, expanded and deepened many times
Moderate increase in the level of international diversification, local market financial instruments make up a significant share of modern investment portfolios
Most researchers of the home bias call the main reason for this deviation transaction and information costs, which are always present in imperfect capital markets and cause a high share of local market assets in the portfolio
Summary
The modern portfolio theory of international investments has a long history of development, during which it has been transformed and improved, expanded and deepened many times. Moderate increase in the level of international diversification, local market financial instruments make up a significant share of modern investment portfolios. K. Chan suggests the following definition: «a state in which investors do not use the opportunities of international diversification, because they allocate a relatively large part of their capital to local market instruments» [3]. M. Levis, in turn, gives the following definition: «the tendency for investors to rely on investments in local markets, without making full use of international diversification» [5]. The researchers concluded that the main reason for the low level of international diversification was not institutional constraints on the capital market, but independent decisions of investors [11]. Markets that have the status of international financial centres, such as Luxembourg, Switzerland, and Ireland traditionally have a low share of local market assets, as they are the embodiment of the benefits of international portfolio diversification
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