IDEAS home Printed from https://ideas.repec.org/p/shf/wpaper/2023005.html
   My bibliography  Save this paper

Household portfolios and financial literacy: The flight to delegation

Author

Listed:
  • Sarah Brown

    (Department of Economics, University of Sheffield, UK; and IZA Bonn)

  • Alexandros Kontonikas

    (Essex Business School, University of Essex)

  • Alberto Montagnoli

    (Department of Economics, University of Sheffield, UK)

  • Harry Pickard

    (Newcastle University Business School, Newcastle University)

  • Karl Taylor

    (Department of Economics, University of Sheffield; and IZA Bonn)

Abstract

In this paper we analyse the asset allocation of European households, focusing on developments during the period that followed the recent twin financial crises. We examine whether “search for yield” materialises outside financial institutions and whether the degree of financial literacy plays a role. We consider a wider set of alternatives to the safe assets by incorporating mutual funds to the standard set of stocks and bonds. We provide novel evidence which suggests that the “search for yield” during the post-crisis period of low interest rates took place not by raising the direct holdings of stocks and bonds, but rather indirectly through higher mutual funds’ holdings, in line with a “flight to delegation”. Importantly, this behaviour is strongly linked to the level of financial literacy, with the most literate households displaying significantly higher use of mutual funds.

Suggested Citation

  • Sarah Brown & Alexandros Kontonikas & Alberto Montagnoli & Harry Pickard & Karl Taylor, 2023. "Household portfolios and financial literacy: The flight to delegation," Working Papers 2023005, The University of Sheffield, Department of Economics.
    • Handle: RePEc:shf:wpaper:2023005
    as

    Download full text from publisher

    File URL: https://www.sheffield.ac.uk/economics/research/serps
    File Function: First version, February 14 2023
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    Asset allocation; Financial literacy; Delegation;
    All these keywords.

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:shf:wpaper:2023005. 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: Mike Crabtree (email available below). General contact details of provider: https://edirc.repec.org/data/desheuk.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.