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"Putting All Eggs in One Basket" Thailand's Under-Investment Abroad: Impact and Explanations

Author

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  • Pornpen Sodsrichai

    (Bank of Thailand)

  • Sakkapop Panyanukul

    (Bank of Thailand)

  • Nantaporn Pongpatthananon

    (Bank of Thailand)

Abstract

This paper presents the degree of under-investment in foreign assets, known as a home–bias phenomenon, in 30 developed and developing countries across the world including Thailand. We find that Thailand’s home-bias is high compared to other countries’ home-bias and it decreases at a slower pace over time. The study also shows that a country with higher levels of home-bias experiences lower international risk sharing and has more volatile consumption patterns during the sample period of 1970 to 2010. To strengthen Thailand’s resiliency to unexpected economic shocks and maintain country’s economic welfare through better consumption smoothing, the policy challenges identified in this paper include capital outflow measures, tax policy, coherent institutional supports and guidelines to improve investors’ internationalized skills.

Suggested Citation

  • Pornpen Sodsrichai & Sakkapop Panyanukul & Nantaporn Pongpatthananon, 2011. ""Putting All Eggs in One Basket" Thailand's Under-Investment Abroad: Impact and Explanations," Working Papers 2011-06, Monetary Policy Group, Bank of Thailand.
    • Handle: RePEc:bth:wpaper:2011-06
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    File URL: https://www.bot.or.th/Thai/EconomicConditions/Publication/DiscussionPaper/dp062011_eng.pdf
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