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Early 60s is not old enough: Evidence from twenty-one countries’ equity fund markets

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  • Kim, Sei-Wan
  • Lee, Bong-Soo
  • Kim, Young-Min

Abstract

Motivated by the fact that demographic structure influences market risk aversion, we investigate how demographic structure affects demand for equity funds by employing twenty-one countries’ data. Our main findings are as follows. First, we find that the old generation is active in equity fund investment, which goes against the life cycle risk-aversion hypothesis. In particular, investors who have newly joined the old generation demonstrates a more marked demand for equity funds than do other aged investors. Second, we find that the old generation’s greater demand for equity funds is associated with the size of this population and their increased life expectancy. Our empirical results reveal that persons who are in their early 60s, that is, who have newly joined the old generation, show less market risk aversion and increased demand for equity funds.

Suggested Citation

  • Kim, Sei-Wan & Lee, Bong-Soo & Kim, Young-Min, 2019. "Early 60s is not old enough: Evidence from twenty-one countries’ equity fund markets," Journal of International Money and Finance, Elsevier, vol. 92(C), pages 62-74.
  • Handle: RePEc:eee:jimfin:v:92:y:2019:i:c:p:62-74
    DOI: 10.1016/j.jimonfin.2018.12.005
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    Keywords

    Equity fund demand; Old generation; Life expectancy;

    JEL classification:

    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • G2 - Financial Economics - - Financial Institutions and Services
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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