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Household portfolios in Japan

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  • Iwaisako, Tokuo
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    Abstract

    I provide a detailed description and in-depth analysis of household portfolios in Japan. (1) It is shown that the share of equities in financial wealth and the stock market participation of Japanese households decreased throughout the 1990s. (2) Using survey data, age-related variations in the share of stocks in financial wealth are analyzed. The equity share and stock market participation increase with age among young households, peaking when people reach their 50s, and then stabilizing. However, the share of equities conditional on ownership exhibits no significant age-related pattern, implying that age-related patterns are primarily explained by the decision to hold stocks. A similar mechanism operates to that found in previous studies of Western countries. (3) Owner-occupied housing has a significantly positive effect on stock market participation and on the share of stocks in financial wealth.

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    Bibliographic Info

    Article provided by Elsevier in its journal Japan and the World Economy.

    Volume (Year): 21 (2009)
    Issue (Month): 4 (December)
    Pages: 373-382

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    Handle: RePEc:eee:japwor:v:21:y:2009:i:4:p:373-382

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    Web page: http://www.elsevier.com/locate/inca/505557

    Related research

    Keywords: Household portfolio Life-cycle portfolio choice Owner-occupied housing;

    References

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    1. James M. Poterba & Andrew A. Samwick, 1997. "Household Portfolio Allocation Over the Life Cycle," NBER Working Papers 6185, National Bureau of Economic Research, Inc.
    2. Charles Yuji Horioka, 2001. "Are the Japanese Selfish, Altruistic, or Dynastic?," CIRJE F-Series CIRJE-F-134, CIRJE, Faculty of Economics, University of Tokyo.
    3. James Banks & Richard Blundell & James P. Smith, 2002. "Wealth Portfolios in the UK and the US," NBER Working Papers 9128, National Bureau of Economic Research, Inc.
    4. John Y. Campbell & Joao F. Cocco, 2002. "Household Risk Management and Optimal Mortgage Choice," Harvard Institute of Economic Research Working Papers 1946, Harvard - Institute of Economic Research.
    5. Tokuo Iwaisako, 2003. "Household Portfolios in Japan," NBER Working Papers 9647, National Bureau of Economic Research, Inc.
    6. Miquel Faig & Pauline Shum, 2002. "Portfolio Choice in the Presence of Personal Illiquid Projects," Journal of Finance, American Finance Association, vol. 57(1), pages 303-328, 02.
    7. Yamashita, Takashi, 2003. "Owner-occupied housing and investment in stocks: an empirical test," Journal of Urban Economics, Elsevier, vol. 53(2), pages 220-237, March.
    8. Storesletten, Kjetil & Telmer, Chris & Yaron, Amir, 2002. "Asset pricing with idiosyncratic risk and overlapping generations," Seminar Papers 703, Stockholm University, Institute for International Economic Studies.
    9. Niko Canner & N. Gregory Mankiw & David N. Weil, 1994. "An Asset Allocation Puzzle," NBER Working Papers 4857, National Bureau of Economic Research, Inc.
    10. Hayashi, Fumio, 1995. "Is the Japanese Extended Family Altruistically Linked? A Test Based on Engel Curves," Journal of Political Economy, University of Chicago Press, vol. 103(3), pages 661-74, June.
    11. Rui Yao, 2005. "Optimal Consumption and Portfolio Choices with Risky Housing and Borrowing Constraints," Review of Financial Studies, Society for Financial Studies, vol. 18(1), pages 197-239.
    12. French, K.R. & Poterba, J.M., 1990. "Are Japanese Stock Prices Too High?," Working papers 547, Massachusetts Institute of Technology (MIT), Department of Economics.
    13. David le Blanc & Christine Lagarenne, 2004. "Owner-Occupied Housing and the Composition of the Household Portfolio: The Case of France," The Journal of Real Estate Finance and Economics, Springer, vol. 29(3), pages 259-275, November.
    14. Takatoshi Ito, 1994. "Public Policy and Housing in Japan," NBER Chapters, in: Housing Markets in the U.S. and Japan, pages 215-238 National Bureau of Economic Research, Inc.
    15. Noland, Marcus, 1988. "Japanese Household Portfolio Allocation Behavior," The Review of Economics and Statistics, MIT Press, vol. 70(1), pages 135-39, February.
    16. James M. Poterba & Andrew A. Samwick, 1995. "Stock Ownership Patterns, Stock Market Fluctuations, and Consumption," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 26(2), pages 295-372.
    17. Horioka, C.Y. & Watanabe, W., 1996. "Why Do People Save? A Micro-Analysis of Motives for Household Saving in Japan," ISER Discussion Paper 0412, Institute of Social and Economic Research, Osaka University.
    18. Cai, Jun & Chan, K C & Yamada, Takeshi, 1997. "The Performance of Japanese Mutual Funds," Review of Financial Studies, Society for Financial Studies, vol. 10(2), pages 237-73.
    19. Joao F. Cocco, 2005. "Portfolio Choice in the Presence of Housing," Review of Financial Studies, Society for Financial Studies, vol. 18(2), pages 535-567.
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