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EU views and household investments: evidence from the Brexit referendum

Author

Listed:
  • Michele Cascarano

    (Bank of Italy)

  • Laura Sigalotti

    (Bank of Italy)

  • Francesco Stradi

    (KU Leuven)

Abstract

This study investigates how Euroscepticism affected the portfolio choices of Italian retail investors following the Brexit referendum. Using granular investment data, we show that residents of Eurosceptic provinces significantly increased their allocations to UK securities after Brexit (relative to residents of pro-European provinces), suggesting that Eurosceptic investors perceived Brexit as a positive event for UK prospects. Robustness checks show that the results are not driven by potential demographic, geographic, or economic confounders, nor by banks' advice or broader geographic portfolio rebalancing. Our findings highlight how polarization in political beliefs, when coupled with pivotal geopolitical events, can influence international investment decisions.

Suggested Citation

  • Michele Cascarano & Laura Sigalotti & Francesco Stradi, 2025. "EU views and household investments: evidence from the Brexit referendum," Temi di discussione (Economic working papers) 1504, Bank of Italy, Economic Research and International Relations Area.
    • Handle: RePEc:bdi:wptemi:td_1504_25
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    File URL: https://www.bancaditalia.it/pubblicazioni/temi-discussione/2025/2025-1504/en_tema_1504.pdf
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets

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