Consistency of Diversification Patterns with Investors’ Risk Attitudes: Evidence from German Household Portfolios
This paper explores the relationship between self-declared risk aversion of private investors and their willingness to hold diversified portfolios of financial assets. The analysis is based on household survey data from the German Socioeconomic Panel (SOEP) that provides a reliable measure of individual attitudes towards financial risk. Our findings suggest that more risk averse households tend to hold incomplete portfolios consisting mainly of a few risk free assets. We also find that the propensity to diversify is highly dependent on whether liquidity and safety needs are satisfied. We conclude from this evidence that households consider absence of liquidity and safety as opportunity cost of diversification that overcompensates the advantage of a possible overall reduction in investment risk.
To our knowledge, this item is not available for
download. To find whether it is available, there are three
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.
|Date of creation:||17 Nov 2010|
|Date of revision:|
|Contact details of provider:|| Postal: Jönköping International Business School, P.O. Box 1026, SE-551 11 Jönköping, Sweden|
Web page: http://www.jibs.hj.se/
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:hhb:hjacfi:2010_004. 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: (Susanne Hansson)or (Stefan Carlstein) The email address of this maintainer does not seem to be valid anymore. Please ask Stefan Carlstein to update the entry or send us the correct email address
If references are entirely missing, you can add them using this form.