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Home Country Bias: Does Domestic Experience Help Investors Enter Foreign Markets?

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Executive Summary

This paper investigates whether investors' domestic experience helps them enter foreign markets. The authors show that investors first invest in domestic securities and only some time later they invest abroad in foreign securities. They also show that investors who trade more often in the domestic market start to invest abroad earlier. Their findings suggest that the experience investors acquire while they trade in the domestic market is a key reason why active investors enter the foreign market earlier.

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