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Household Portfolios in Japan

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  • Tokuo Iwaisako
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    Abstract

    This paper provides an in-depth review and analysis of household portfolios in Japan. (1) Using both aggregate and disaggregate data, it is shown that the shares of equities in household financial wealth have been decreasing throughout the 1990s. Stock market participations of Japanese households also have declined in the last decade. This is in sharp contrast to the U.S. and European countries in which increasing trends in household stock holdings are observed. (2) Using survey data, age-related variation in stock shares in financial wealth is analyzed. Equity shares in financial wealth increases with age among young households, peaking in the fifties age group, then becoming constant. This peak comes in a much later stage of the life-cycle compared to other countries. Stock market participation varies in a way very similar to unconditional equity shares, while equity shares conditional on ownership exhibit no significant age-related pattern. This implies the age-related patterns are mostly explained by the decision to hold or not to hold stocks at all. Such a mechanism is the same as previous studies reporting about western countries. (3) Owner-occupied housing has significantly positive effect on stock market participation and stock shares in financial wealth. This suggests that the age-related pattern observed in stock holding cannot be analyzed separately from household's tenure choice of housing. Therefore any serious attempt at modeling Japanese households' dynamic portfolio choice should incorporate the effect of housing tenure choice.

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    File URL: http://www.nber.org/papers/w9647.pdf
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    Bibliographic Info

    Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 9647.

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    Date of creation: Apr 2003
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    Publication status: published as Iwaisako, Tokuo, 2009. "Household portfolios in Japan," Japan and the World Economy, Elsevier, vol. 21(4), pages 373-382, December.
    Handle: RePEc:nbr:nberwo:9647

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    References

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    1. Horioka, Charles Yuji & Watanabe, Wako, 1997. "Why Do People Save? A Micro-Analysis of Motives for Household Saving in Japan," Economic Journal, Royal Economic Society, vol. 107(442), pages 537-52, May.
    2. Poterba, J.M. & Samwick, A.A., 1996. "Stock Ownership Patterns, Stock Market Fluctuations, and Consumption," Working papers 96-2, Massachusetts Institute of Technology (MIT), Department of Economics.
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    Cited by:
    1. Serdat Dinc & Patrick M. McGuire, 2004. "Did investors regard real estate as 'safe' during the 'Japanese Bubble' in the 1980s?," BIS Working Papers 164, Bank for International Settlements.
    2. Huseyin Murat Ozbilgin, 2009. "Financial Market Participation and the Developing Country Business Cycle," Working Papers 0904, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
    3. Cho, Sang-Wook (Stanley), 2010. "Household wealth accumulation and portfolio choices in Korea," Journal of Housing Economics, Elsevier, vol. 19(1), pages 13-25, March.
    4. Sang-Wook Stanley Cho, 2007. "Accounting for Lifecycle Wealth Accumulation: The Role of Housing Institution," Discussion Papers 2007-27, School of Economics, The University of New South Wales.
    5. John Y. Campbell, 2006. "Household Finance," Journal of Finance, American Finance Association, vol. 61(4), pages 1553-1604, 08.
    6. Honohan, Patrick, 2006. "Household financial assets in the process of development," Policy Research Working Paper Series 3965, The World Bank.
    7. Kiichi Tokuoka, 2010. "Rebalancing in Japan," IMF Working Papers 10/293, International Monetary Fund.
    8. Kiichi Tokuoka, 2010. "The Outlook for Financing Japan's Public Debt," IMF Working Papers 10/19, International Monetary Fund.
    9. Iwaisako, Tokuo, 2009. "Household portfolios in Japan," Japan and the World Economy, Elsevier, vol. 21(4), pages 373-382, December.
    10. Neal Maroney & Atsuyuki Naka, 2006. "Diversification Benefits of Japanese Real Estate Over the Last Four Decades," The Journal of Real Estate Finance and Economics, Springer, vol. 33(3), pages 259-274, November.

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