IDEAS home Printed from https://ideas.repec.org/p/chf/rpseri/rp1001.html
   My bibliography  Save this paper

Housing and its Role in the Household Portfolio in Colombia

Author

Listed:
  • Camilo SERRANO

    (University of Geneva (HEC and GFRI))

  • Martin HOESLI

    (University of Geneva (HEC, GFRI and SFI), University of Aberdeen, Bordeaux Ecole de Management)

Abstract

We examine the optimal allocation of assets in the portfolio of a Colombian homeowner conditional on various levels of the house value to net wealth ratio. The high rate of home ownership and low rates of investment in financial assets indicate that households allocate most of their wealth to housing. Our results suggest that actual allocations are suboptimal and that significant gains can be obtained with a higher degree of diversification. In particular, we find that housing plays a positive role in efficient portfolio allocation when the housing to net wealth ratio is less than 1.5, but when the house value is higher than what the household can afford, it inevitably increases the risk for the household. The housing policy implications is that the results could help define the maximum mortgage that may be granted to a given household and determine which households qualify for housing acquisition or rental subsidies.

Suggested Citation

  • Camilo SERRANO & Martin HOESLI, 2010. "Housing and its Role in the Household Portfolio in Colombia," Swiss Finance Institute Research Paper Series 10-01, Swiss Finance Institute.
    • Handle: RePEc:chf:rpseri:rp1001
    as

    Download full text from publisher

    File URL: http://ssrn.com/abstract=1534657
    Download Restriction: no
    File URL:
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Sascha Tobias Wengerek & Benjamin Hippert & André Uhde, 2019. "Risk allocation through securitization - Evidence from non-performing loans," Working Papers Dissertations 58, Paderborn University, Faculty of Business Administration and Economics.

    More about this item

    Keywords

    Housing; Home Ownership; Household Portfolio; Modern Portfolio Theory; Efficient Frontiers; Colombia;
    All these keywords.

    JEL classification:

    • R20 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - General
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:chf:rpseri:rp1001. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ridima Mittal (email available below). General contact details of provider: https://edirc.repec.org/data/fameech.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.