Hamburg Financial Research Center

Marwin Mönkemeyer

Doctoral Students
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Curriculum Vitae

Marwin Mönkemeyer is a Research Fellow at the Hamburg Financial Research Center (HFRC) and a PhD scholar at the Department of Corporate Finance and Asset Management at the University of Hamburg, Germany. He will be a Visiting Associate at Cambridge Judge Business School and at the Cambridge Endowment for Research in Finance (CERF) from February through June 2022. His research interest broadly lies in Empirical Corporate Finance, Social Finance, Institutional Investors, and International Finance. A central question in Marwin’s research is how social norms shape institutional investors’ cross-border investment behavior.

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Foreign bias in institutional portfolio allocation: The role of social trust

Wolfgang Drobetz, Marwin Mönkemeyer, Ignacio Requejo, Henning Schröder
HFRC Working Paper Series | Version 05/2022
Using a large sample of institutionally managed portfolios, we study the role of social trust in the equity allocations of 8,088 investors from 33 countries over the 2000-2017 period. The negative relation between social trust and foreign bias suggests that institutional investors from high-social trust countries are less prone to underinvesting in foreign equity. Our results provide credence to an information-based explanation, indicating that social trust reduces foreign bias by compensating the lack of information about foreign markets. The negative relation between social trust and foreign bias does not hold unconditionally, but only relates to host countries with weak formal institutional frameworks. The informal institution of social trust can offset the lack of formal country-level institutions in international portfolio decisions. Social trust helps investors accomplish greater cross-country portfolio diversification.