The consequence of such dual expectations is a lower market clearing price for those assets and a lower level of foreign investment than would exist in the absence of such distortions. Aside from any direct or indirect barriers, people seem to prefer to invest in familiar local businesses even though currency and country risks do not exist.
The United States has no barriers to interstate investment, and the states share a common currency, culture, language, and legal system, yet studies have shown that individual investors and even professional money managers have a slight preference for investments in their own communities and states. Trust, so crucial an aspect of investing, is most likely to be fostered by the familiarity of local communities.