However they are still very few diversified internationally

My research seek to quantify and analyze the process of financial globalisation. I mean financial globalization reduction of the costs of transactions and the restrictions to exchanges of assets on international financial markets (capital control, regulation of the opening of the stock market to foreign investors...). There is financial globalization when exchanges between countries financial assets (Bank loans, exchanges of shares, bonds, etc.) increase. It is currently the case: in twenty years, the financial exchanges between OECD countries have increased four times faster than GDP.

But on closer inspection, financial globalization is much less mass that could have been expected. It took until the 1990s that the proportion of foreign assets held by investors back to the level of 1900, after the first wave of globalization and global conflicts. In addition, investors still appear not to have captured the expected benefits. Indeed, investors should, in theory, take advantage of the opening of markets to better allocate their portfolio. However they are still very few diversified internationally. The portfolio of shares in an American Investor contains about 90 of us securities, that of a French 80 of French titles. In a perfectly open world, these parts should be equal to the share of the domestic market in the world market capitalization, 47 for the United States and 5 for the France! Despite the institutional opening of financial markets, it is costly to invest abroad to a variety of reasons: lack of information, different legal systems, cultural and linguistic barriers, currency risks, often heavier taxation on the income of foreign assets.

Even more surprising, when analyzing the low appointing foreign share, investors prefer close markets both geographically and in phase with their national market. An investor invests heavily in the country and a little its neighbors, a strategy which seems to go against the basic recommendations of risk diversification. Indeed, investors should prefer markets distant and weakly correlated with their national market to ensure the best. What explains these paradoxes

In my thesis done at the EHESS in the laboratory of Paris-Jourdan Sciences Economiques (PSE), I show, on the one hand, that financial globalization increases simultanémentles financial exchange and synchronization of the markets, because it facilitates the international propagation of shocks. Let's take a concrete example: by removing the costs of transaction on the foreign exchange market, the introduction of the single currency deepened financial globalization among countries of the euro area. The France has increased its financial exchanges with the countries of the zone and the French stock market has become more synchronized with other markets quoted in euros. The synchronization of the markets is therefore that the corollary of their deeper integration. However, in the euro area, French investors seek to diversify the national risk. Therefore, the international allocation of capital does not contradict the standard theory of diversification!

On the other hand, there is also a strong link between trade in goods and trade in financial assets. The similarities are striking: as investors, consumers buy local products especially or coming from their close neighbours. For trade in goods, the transportation costs that restrict trade between distant economies may explain this phenomenon, but there is no such costs to "carry" financial assets. My research shows that trade and finance are in reality very complementary. In other words, it is natural that business partners share much more in the financial markets.

First, financial globalization stimulates trade because it is easier for a company to finance its export activities. Importantly, globalization commerciale(entenduecommeaugmentationdeledecommercedemarchandises) greatly increases financial flows. Why First suggests that trade decreased financial market information asymmetries: the French investors familiar companies that export in France and are therefore preferred investment choices. In addition, these same firms are directly in competition with French firms, so they can be good insurance in case of loss of market shares of French companies. It is not surprising that in the image of the trade in goods, financial exchanges are concentrated between neighbouring economies. The countries of the South, more distant of the developed countries, are thus partially excluded from globalization.