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Do institutional investors perform better in emerging markets?

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  • Badhani, K.N.
  • Kumar, Ashish
  • Vo, Xuan Vinh
  • Tayde, Mangesh

Abstract

Emerging markets with their imperfections, low liquidity, and dominance of naive retail investors are likely to provide attractive profit-making opportunities for sophisticated and resourceful institutional investors. The institutional investors traditionally had low participation in these markets, but it has grown tremendously during recent years. Therefore, these markets provide a natural experimental setting to understand the implications of their activities on asset pricing and to evaluate their market timing and stock-picking skills. In this study, we compare the performance of foreign institutional investors (FIIs) and domestic institutional investors (DIIs) in one of the important Asian emerging markets.

Suggested Citation

  • Badhani, K.N. & Kumar, Ashish & Vo, Xuan Vinh & Tayde, Mangesh, 2023. "Do institutional investors perform better in emerging markets?," International Review of Economics & Finance, Elsevier, vol. 86(C), pages 1041-1056.
    • Handle: RePEc:eee:reveco:v:86:y:2023:i:c:p:1041-1056
    DOI: 10.1016/j.iref.2022.01.003
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    More about this item

    Keywords

    Institutional investors; Market-timing skill; Security picking skill; Price-pressure; Base brooding; Emerging markets;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors

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