Cross-border Investments, Currency Risks and Portfolio Returns: The Case of Epack - Ghana

Vera Ogeh Fiador, Felicia Joan Asare

Abstract


The study sought to examine the impact of currency risks on the performance of cross-border collective investment schemes. Using data monthly from Ghana and selected African countries over the period 2005 to 2010 and employing a Hendry type error correction model, the results of the study seem to indicate that ccurrency risks are important in explaining the returns on cross-border investments albeit with a lag and upon aggregation. The findings also indicate significant effects flowing from macroeconomic variables such as interest rates. These findings indicate a need to consider currency risks and domestic interest rates when compiling investment portfolios. The findings have significant policy implications as regards international or cross-border investments.


Full Text: PDF DOI: 10.5539/ibr.v6n1p137

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International Business Research  ISSN 1913-9004 (Print), ISSN 1913-9012 (Online)

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