“…In brief, there are mainly two types of explanations, namely market constrictions and investor behaviour. As for the first category, many factors may reduce returns from investing abroad or limit investors' capability to hold foreign assets transaction costs (Glassman and Riddick, 2001;Coeurdacier and Rey, 2013), differences in tax treatment, limits on cross-border investment (French and Poterba, 1991), real exchange rate (Fidora et al, 2006), and market transparency (Giofrè, 2013). But, as French and Poterba say, such constraints are not binding and appear unable to fully explain limited international diversification.…”