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Asset formation by households during the financial crisis

Author

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  • Philip Du Caju

    (National Bank of Belgium, Research Department)

Abstract

The article presents a microeconomic analysis of asset formation by Belgian households and the impact which the financial crisis has had on that. For the first time, data from a survey of households’ financial behaviour are used. The survey data are a useful addition to the existing macroeconomic information. During the crisis, many households deserted equities in favour of bank accounts, and bank accounts in favour of real estate. On the other hand, there were some households which actually invested more in equities during this period. Many households also transferred funds between various bank accounts, and some households avoided particular assets altogether. The survey offers direct information on households’ attitudes to financial risk and demographic and socio-economic characteristics that play a role in these movements. Some specific portfolio choices which households have made since the beginning of the financial crisis can be pointed up. First, there were noticeably large numbers of transfers between accounts with financial institutions, probably partly owing to the mounting mistrust of such accounts and of certain financial institutions in particular. Secondly, positions in equities and equity funds were reduced in many cases, whereas there were still some households wanting to invest more in these assets. Therefore, not all Belgian investors were averse to (calculated) financial risk. Real estate continues to play a clear role as a safe haven. Many households withdrew cash from bank accounts in order to invest in real estate, and it seems that few households intend to retreat from it.

Suggested Citation

  • Philip Du Caju, 2012. "Asset formation by households during the financial crisis," Economic Review, National Bank of Belgium, issue i, pages 87-100, June.
    • Handle: RePEc:nbb:ecrart:y:2012:m:june:i:i:p:87-100
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    File URL: https://www.nbb.be/en/articles/asset-formation-households-during-financial-crisis-1
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    Citations

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    Cited by:

    1. Ph. Du Caju, 2016. "The distribution of household wealth in Belgium : initial findings of the second wave of the Household Finance and Consumption Survey (HFCS)," Economic Review, National Bank of Belgium, issue ii, pages 27-43, september.
    2. Ph. Du Caju & Th. Roelandt & Chr. Van Nieuwenhuyze & M.-D. Zachary, 2014. "Household debt: evolution and distribution," Economic Review, National Bank of Belgium, issue ii, pages 61-81, September.
    3. Dorothea Schäfer & Michael Stöckel & Henriette Weser, 2020. "Crisis Impact on the Diversity of Financial Portfolios: Evidence from European Citizens," Discussion Papers of DIW Berlin 1899, DIW Berlin, German Institute for Economic Research.
    4. V. Baugnet & Ph. Du Caju & M.-D. Zachary, 2017. "Low interest rates and their impact on Belgian households," Economic Review, National Bank of Belgium, issue i, pages 43-59, June.
    5. Ph. Du Caju, 2013. "Structure and distribution of household wealth: An analysis based on the HFCS," Economic Review, National Bank of Belgium, issue ii, pages 41-62, September.

    More about this item

    Keywords

    household finance; asset formation; financial crisis; household survey;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions

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