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Identifying Drivers for the Accumulation of Household Financial Wealth

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Abstract

Household financial assets and liabilities display considerable variation across countries and over time. This article investigates empirically the role of some of the key Life Cycle Model variables and other relevant factors behind household financial wealth disparities using data from 40 countries over the period 1995-2009. To the author's knowledge, it uses the largest macroeconomic dataset on household financial assets and liabilities assembled to date. The results are in line with the aggregative implications of the Life Cycle Model in that the wealth-to-income ratio decreases with income per capita growth and increases with the expected length of retirement. The study also presents empirical evidence for the role of financial and demographic developments on the accumulation of financial assets and liabilities by the household sector.

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Paper provided by Tor Vergata University, CEIS in its series CEIS Research Paper with number 264.

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Length: 40 pages
Date of creation: 13 Feb 2013
Date of revision: 13 Feb 2013
Handle: RePEc:rtv:ceisrp:264
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CEIS - Centre for Economic and International Studies - Faculty of Economics - University of Rome "Tor Vergata" - Via Columbia, 2 00133 Roma

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Keywords: Household sector balance sheets; financial wealth; household assets; household liabilities; financial development;

Find related papers by JEL classification:

  • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
  • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth

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Cited by:

  1. Merike Kukk, 2014. "Distinguishing the components of household financial wealth: the impact of liabilities on assets in Euro Area countries," Bank of Estonia Working Papers wp2014-2, Bank of Estonia, revised 10 Oct 2014.

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