IDEAS home Printed from
MyIDEAS: Login to save this paper or follow this series

Risk Management, Liquidity Constraints, and the Demand for Risky Assets in France

  • Arrondel, L.

In a prevailing climate of increasing uncertainty (rising risk of unemployment, pension funding problems and unstable family structures), French households have adopted new saving behavior reflected during the nineties, primarily by considerable investment in life insurance and its derivative products (more than 50 percent of financial saving). Recent theoretical saving models have placed greater emphasis on studying prudent behavior in the face of an uncertain future and have shown the influences of multiple risks and borrowing constraints on portfolio choices. In this vein, a household exposed to a high future income risk or strong liquidity constraints may reduce its investments in risky assets and increase its share of liquid investments. Empirical tests on recent French data ("Patrimoine 97") show the relevance of these new factors to explain risky assets demand. Like theoretical models predict, we observe a negative impact of liquidity constraints on risky assets portfolio. But tests do not support the proposition that background risk depresses the willingness to bear other avoidable risks. Moreover, in opposition to this prediction, I find that when households are confronted with high income risk, they hold also a greater proportion of risky assets : income risk and portfolio risk are not substitute.

To our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.

Paper provided by DELTA (Ecole normale supérieure) in its series DELTA Working Papers with number 2000-20.

in new window

Length: 21 pages
Date of creation: 2000
Date of revision:
Handle: RePEc:del:abcdef:2000-20
Contact details of provider: Postal: 48 boulevard Jourdan - 75014 Paris
Phone: 01 43 13 63 00
Fax: 01 43 13 63 10
Web page:

More information through EDIRC

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:del:abcdef:2000-20. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()

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.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with 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 profile, as there may be some citations waiting for confirmation.

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

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.