Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/308301 
Year of Publication: 
2024
Series/Report no.: 
IZA Discussion Papers No. 17442
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
We provide the first empirical evidence on how media-driven narratives influence cross-border institutional investment flows. Applying natural language processing techniques to one-and-a-half million newspaper articles, we document substantial cross-country variation in sentiment and risk indices constructed from domestic media narratives about China in 15 countries. These narratives significantly affect portfolio flows, even after controlling for macroeconomic and financial fundamentals. This impact is smaller for investors with greater familiarity or private information about China and larger during periods of heightened uncertainty. Political and environmental narratives are as influential as economic narratives. Investors react more sharply to negative narratives than positive ones.
Subjects: 
media narratives
cross-border flows
institutional investors
portfolio investment in China
textual analysis
natural language processing
JEL: 
F30
G11
G15
Document Type: 
Working Paper

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