Abstract
The main purpose of this study is to explore how the ease and efficiency of information transmission, facilitated by the diffusion of the Internet, may affect the cross-border financial asset trades between countries. With an extensive panel dataset of 67 source countries and 173 host countries from 2001 to 2013, it is found that the Internet diffusion leads to an increase in the bilateral FPI holdings. The magnitude of the effect increases as the level of FPI holdings approaches zero, indicating that information barrier is a stronger deterrence at the near-zero level of asset trades.
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