Essays on Information in Emerging Financial Markets
Author | : Stefan Alexis Hunt |
Publisher | : |
Total Pages | : 330 |
Release | : 2010 |
ISBN-10 | : OCLC:657054863 |
ISBN-13 | : |
Rating | : 4/5 (63 Downloads) |
Book excerpt: Using the same dataset, the second essay investigates the source of superior local returns. Investors bias their portfolios towards crops grown within 100km and earn returns in these "local" commodities that are 3.2% higher than in their non-local commodities. This differential is greatest in crops that are weather sensitive and for which India has a high percentage of world production. The results are consistent with traders possessing superior domestic supply information on their local commodities due to lower acquisition costs caused by proximity to crop production. The third essay evaluates a randomized controlled trial that provided financial education and spot and futures prices to farmers. Treated individuals score higher on a test of knowledge of futures markets, indicate a greater trust in financial markets, and report changes in price gathering behavior. They are more likely to mention using futures prices to form price expectations and report price expectations that are closer to contemporaneous spot and futures prices. However, their real investment decision, crop selection, remains unchanged.