Are Investors Responsible for Stock Market

This paper provides empirical evidence that stock market crises are spread between countries through changes in international investors ' asset holdings rather than changes in each country's market fundamentals. By separating firms into two categories, those eligible for purchase by foreigners (investable) and those that are not (non-investable), we show that international transmissions of crises are more pronounced in investable stocks than non-investable stocks

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Abstract An intricate web of claims and obligations ties together the balance sheets of a wide variety of financial institutions. Under the occurrence of default, these interbank claims generat