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Institutional Reform and Depositors' Portfolio Choice - Evidence from Bank Account Data

Author

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  • Berlemann, Michael

    (Helmut Schmidt University, Hamburg)

  • Luik, Marc-André

    (Helmut Schmidt University, Hamburg)

Abstract

This paper studies the effect of institutional reform on the decision to hold risky assets at the example of the natural experiment of German Division and Reunification. We present empirical evidence indicating that even 16 years after German Reunification risky portfolio choice and composition differed systematically between East and West German bank customers, even after controlling for socio-demographic factors. While these differences are especially pronounced for bank customers with experiences in the former communist system, even the younger generation of East Germans still differs remarkably from their West German counterpart in terms of risky asset choice. Thus, informal institutions tend to have more long-lasting effects on portfolio behavior as previous studies seem to imply.

Suggested Citation

  • Berlemann, Michael & Luik, Marc-André, 2016. "Institutional Reform and Depositors' Portfolio Choice - Evidence from Bank Account Data," Working Paper 173/2016, Helmut Schmidt University, Hamburg.
    • Handle: RePEc:ris:vhsuwp:2016_173
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    Citations

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    Cited by:

    1. Beckmann, Klaus B., 2017. "Bounded rationality in differential games," Working Paper 178/2017, Helmut Schmidt University, Hamburg.
    2. Bantle, Melissa & Muijs, Matthias, 2018. "A new price test in geographic market definition – an application to german retail gasoline market," Working Paper 180/2018, Helmut Schmidt University, Hamburg.

    More about this item

    Keywords

    Institutional reform; stockholding puzzle; portfolio choice; bank data;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • P36 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Consumer Economics; Health; Education and Training; Welfare, Income, Wealth, and Poverty

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