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Participation following sudden access

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  • Fuchs-Schündeln, Nicola
  • Haliassos, Michael

Abstract

The German reunification experiment provided sudden access to previously unavailable financial products, supported by knowledgeable practitioners. This setting offers new perspectives on participation, inertia, and product diffusion. Controlling for characteristics, East Germans experienced a jump in securities participation to a level comparable to West Germans’ participation immediately following reunification, and to an even higher level for consumer debt, while exhibiting inertia in previously accessible products. They showed no signs of subsequent retreat. Lower financial resources are the most important characteristic explaining lower East German participation in all asset classes, while expectations and peer effects drive the higher East German debt participation.

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  • Fuchs-Schündeln, Nicola & Haliassos, Michael, 2021. "Participation following sudden access," Journal of Monetary Economics, Elsevier, vol. 117(C), pages 671-688.
    • Handle: RePEc:eee:moneco:v:117:y:2021:i:c:p:671-688
    DOI: 10.1016/j.jmoneco.2020.04.003
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    2. Bondar Mariia & Fuchs-Schündeln Nicola, 2023. "Good Bye Lenin Revisited: East-West Preferences Three Decades after German Reunification," German Economic Review, De Gruyter, vol. 24(1), pages 97-119, February.
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    More about this item

    Keywords

    Household finance; Financial market participation; Inertia; German reunification;
    All these keywords.

    JEL classification:

    • G5 - Financial Economics - - Household Finance
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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