A major inhibitor appears to be what economists call “home bias.” Virtually all our trading partners share our inclination to invest a disproportionate percentage of domestic savings in domestic capital assets, irrespective of the differential rates of return. People seem to prefer to invest in familiar local businesses even where currency and country risks do not exist.
Y V Reddy: Regulators’ eyes on financial institutions Comments by Dr Y V Reddy, Governor of the Reserve Bank of India, published in January 2007 issue of The Banker, London. It can also be accessed at www.thebanker.com. *  *  *  As we move from a world based on relationships to one based on transactions, can our banks be far behind?