DETERMINANTS OF INTERNATIONAL PORTFOLIO INVESTMENT FLOWS

This paper investigates the determinants of foreign portfolio investment flows into a market on which restrictions for foreign investments were recently removed, the Finnish stock market. The time period of investigation is 1993 to 1998. During that period, after the removal of restrictions for foreign ownership in 1993, the relative share of the Finnish stock market owned by foreign investors has rapidly grown and is in September 1998 33.9% percentage of the total number of listed shares, and 50.2% of the total market value of listed shares. Using company specific data on the degree of foreign ownership, our preliminary results indicate that foreign investment flows are significantly related to profitability, market liquidity and firm size.