Do institutional factors influence cross-border portfolio equity flows? New evidence from emerging markets

•We study the determinants of equity portfolio cross-border flows to emerging markets.•We use a unique database covering 20 exchanges during the 2006–2018 period.•We find that pull factor matter more than push factors when explaining inflows.•Removing explicit barriers to investment is strongly related to cross-border flows.•Enhancing corporate governance practices is also strongly related to cross-border flows. We exploit a proprietary database containing foreign trading data from 20 stock exchanges for the 2006–2018 period to expand the existing evidence on cross-border equity flows towards emerging markets. In particular, after briefly assessing the relevance of push and pull factors, we study whether explicit and implicit barriers to investment, corporate governance standards and market structure features influence cross border equity inflows. We find that pull factors are an important determinant of foreign inflows, while push factors have a smaller influence. More importantly, we find that removing explicit barriers to investment and adopting stricter corporate governance practices has a long-run positive relation with inflows, conditional on push and pull factors. Removing information barriers also matters, but relatively less. Market structure features have instead little influence on cross-border flows towards emerging markets.