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The Effect of Academic Background on Household Portfolio Selection: Evidence from Japanese Repeated Cross Section Data

Author

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  • Yukinobu Kitamura
  • Taisuke Uchino

Abstract

This paper investigates whether the participation costs play an important role in explaining the households' limited stock market participation in Japan. In order to identify such costs, we focus on the difference of stock holding probability between two household groups whose financial literacy are a priori considered to be different: college-graduate households and non-college-graduate households. Our empirical analysis is utilizing Fairlie (1999, 2005)'s Blinder-Oaxaca decomposition technique in order to decompose the differences that observed in the Japanese repeated cross section survey data. Estimation results show that (1) the participation probability amounts to 35% for college-graduate households, while 18% of non-college-graduate households have stocks, (2) only 30-50% of the differences can be explained by the social and economic attributes, especially by income, wealth and the size of household heads' place of work. These findings imply the existence of participation costs based on the financial literacy.

Suggested Citation

  • Yukinobu Kitamura & Taisuke Uchino, 2010. "The Effect of Academic Background on Household Portfolio Selection: Evidence from Japanese Repeated Cross Section Data," Global COE Hi-Stat Discussion Paper Series gd10-149, Institute of Economic Research, Hitotsubashi University.
    • Handle: RePEc:hst:ghsdps:gd10-149
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    File URL: http://gcoe.ier.hit-u.ac.jp/research/discussion/2008/pdf/gd10-149.pdf
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    Citations

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    Cited by:

    1. Kosuke Aoki & Alexander Michaelides & Kalin Nikolov, 2016. "Household Portfolios in a Secular Stagnation World: Evidence from Japan," Bank of Japan Working Paper Series 16-E-4, Bank of Japan.
    2. Iwaisako, Tokuo & 祝迫, 得夫 & Ono, Arito & Saito, Amane & Tokuda, Hidenobu, 2016. "Impact of population aging on household savings and portfolio choice in Japan," HIT-REFINED Working Paper Series 61, Institute of Economic Research, Hitotsubashi University.
    3. Raslan Alzuabi & Sarah Brown & Daniel Gray & Mark N Harris & Christopher Spencer, 2022. "Household saving, health, and healthcare utilization in Japan [Stature, obesity, and portfolio choice]," Oxford Economic Papers, Oxford University Press, vol. 74(2), pages 473-497.
    4. Rajarshi Mitra & Md. Thasinul Abedin, 2020. "Population Ageing and FDI Inflows in Japan: ARDL Approach to Cointegration Analysis," Economics Bulletin, AccessEcon, vol. 40(2), pages 1814-1825.
    5. Hiroshi Fujiki & Naohisa Hirakata & Etsuro Shioji, 2012. "Aging and Household Stockholdings: Evidence from Japanese Household Survey Data," IMES Discussion Paper Series 12-E-17, Institute for Monetary and Economic Studies, Bank of Japan.
    6. Yuichiro Ito & Yasutaka Takizuka & Shigeaki Fujiwara, 2017. "Portfolio Selection by Households: An Empirical Analysis Using Dynamic Panel Data Models," Bank of Japan Working Paper Series 17-E-6, Bank of Japan.

    More about this item

    Keywords

    Limited market participation; participation costs; Blinder-Oaxaca decomposition;
    All these keywords.

    JEL classification:

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

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