Table of contents alert
Do you want to receive an email alert about new issue?


Volume 70, Issue 5


Households Expectations and Investing in Safe and Risky Financial Assets

Dajcman, Silvo

Year: 2020   Volume: 70   Issue: 5   Pages: 431-460

Abstract: Drawing upon data from the European Commission’s consumer survey, this paper examines how four types of household expectations affect household financial portfolio decisions in the three largest euro area countries: Germany, France, and Italy. Focus is placed on the dynamic response of the shares of safe (currency and transferable deposits) and risky (equity and investment fund shares) financial assets in relation to the total value of financial assets held by the household sector to the shocks in expectations. The results illustrate that expectations are an important determinant of household financial portfolio decisions. In general, in response to improved expectations, households increase the share of risky assets and reduce the share of safe assets. However, country and expectations-type specific differences were observed. The effects of income, prices level, deposit rate and stock price shocks on the household financial portfolio are also documented and compared and the economic policy and financial industry implications of the results are discussed.

JEL classification: D1, D84, G51, G11

Keywords: household expectations, household financial portfolio, safe assets, risky assets

DOI: https://doi.org/10.32065/CJEF.2020.05.03

RePEc: https://ideas.repec.org/a/fau/fauart/v70y2020i5p431-460.html

pdf Attachment [PDF] print Print   Recommend to others Recommend to others