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Effects of the financial crisis on household financial risky assets holdings: Empirical evidence from Europe

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  • Vu, Thi-Hong-Phuong
  • Li, Chu-Shiu
  • Liu, Chwen-Chi

Abstract

The aim of this paper is to analyze the dynamic nature of holding financial risky assets by households before and after the 2008 financial crisis. We use data from Wave 2 (2006–2007) and Wave 4 (2010–2011) of the Survey of Health, Ageing and Retirement in Europe (SHARE), which cover the time periods before and after the 2008 financial crisis, respectively. Empirical evidence shows that households with higher net wealth, higher educational level, higher probability of receiving inheritance, better self-perceived health status, and more social activities tend to own risky assets in both waves. However, household size has significantly negative effect only in Wave 4. Overall, households are less inclined to hold risky assets after the financial crisis. The dynamic results reveal that households with increased net wealth between these two periods have stronger (weaker) association with holding of financial risky assets. Households with older respondent (aged over 65) are less likely to change their financial decisions regarding the owning of risky assets. However, highly-educated households exhibit two different financial behaviors, either increased or decreased probability of owning risky assets. We also find varying effects among countries.

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  • Vu, Thi-Hong-Phuong & Li, Chu-Shiu & Liu, Chwen-Chi, 2021. "Effects of the financial crisis on household financial risky assets holdings: Empirical evidence from Europe," International Review of Economics & Finance, Elsevier, vol. 71(C), pages 342-358.
    • Handle: RePEc:eee:reveco:v:71:y:2021:i:c:p:342-358
    DOI: 10.1016/j.iref.2020.09.009
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    2. Schäfer, Dorothea & Stephan, Andreas & Weser, Henriette, 2023. "Crisis stress for the diversity of financial portfolios — evidence from European households," International Review of Economics & Finance, Elsevier, vol. 83(C), pages 330-347.

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