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Individual Risk Attitudes and the Composition of Financial Portfolios: Evidence from German Household Portfolios

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Nataliya Barasinska, Dorothea Schäfer, Andreas Stephan

In: The Quarterly Review of Economics and Finance 52 (2012), 1, S. 1-14

Abstract

This paper explores the relationship between the self-declared risk aversion of private investors and their propensity to hold incomplete portfolios of financial assets. The analysis is based on household survey data from the German Socioeconomic Panel (SOEP) that provides a reliable measure of individual attitudes toward financial risk. Our findings suggest that more risk averse households tend to hold incomplete portfolios consisting mainly of a few risk-free assets. We also find that the propensity to acquire additional assets is highly dependent on whether liquidity and safety needs are met.

Dorothea Schäfer

Research Director Financial Markets in the Communications Department



JEL-Classification: D14;G11
Keywords: Private households, Portfolio diversification, Risk aversion
DOI:
http://dx.doi.org/10.1016/j.qref.2011.10.001

Frei zugängliche Version: (econstor)
http://hdl.handle.net/10419/142167

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