Household portfolio allocation in the Netherlands: Saving accounts versus stocks and bonds
AbstractThis paper analyzes the portfolio structure of households in the Netherlands. It considers the allocation of financial wealth to two major asset categories, namely saving accounts on the one hand and stocks and bonds on the other hand. The latter category is considered to be more risky than the former. We analyze the impact of the overall level of wealth, the marginal tax rate, and other variables on the allocation between assets, using cross-section data drawn in 1988 that provide detailed information on the structure of household wealth, not only on ownership but also on the amounts of wealth held in the respective asset categories. The econometric specification is a trivariate tobit type model. One equation explains the total level of wealth, a second one explains individual threshold values below which no wealth is held. The third equation explains the share of wealth invested in stocks and bonds. The model is estimated using Full Information Maximum Likelihood. Limited information provided by the data (non reporting) is explicitly taken into account. Results show that wealth and the marginal tax rate are major determinants of the allocation between safe and risky assets.
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Bibliographic InfoPaper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 1995-24.
Date of creation: 1995
Date of revision:
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Portfolio Investment; Bonds; Household Economics; Savings; Stocks; microeconomics;
Find related papers by JEL classification:
- G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
- D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
- C34 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Truncated and Censored Models; Switching Regression Models
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