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Liquidity Constraint and Household Portfolio in Japan


  • Norihiro KASUGA

    (Faculty of Economics, Nagasaki University)

  • Katsumi Matsuura

    (Department of Economics, Hiroshima University)


In this paper, we analyze the financial asset selection behavior of Japanese households. Especially, we focus on whether or not liquidity constraint decreases the amount of a household's risky assets. To investigate this, we first empirically examine which types of household suffer from liquidity constraint. Then, based on the probability obtained from this first stage, we use the Tobit model to estimate the risky asset ratio (=risky asset/total financial asset), and examine the relationship between liquidity constraint and household portfolio. Our results show that the more households suffer from liquidity constraint, the less the households hold risky assets. This is consistent with previous empirical research on Italian households, implemented by Guiso et al.(1996). Our research suggests that the Japanese post-war financial system, which has provided money primarily to the industrial sector rather than the household sector (e.g. consumer loans), might lower the amount of risky assets held by Japanese households.

Suggested Citation

  • Norihiro KASUGA & Katsumi Matsuura, 2005. "Liquidity Constraint and Household Portfolio in Japan," Others 0505010, University Library of Munich, Germany.
  • Handle: RePEc:wpa:wuwpot:0505010
    Note: Type of Document - pdf; pages: 28

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    Cited by:

    1. Kosuke Aoki & Alexander Michaelides & Kalin Nikolov, 2016. "Household Portfolios in a Secular Stagnation World: Evidence from Japan," Bank of Japan Working Paper Series 16-E-4, Bank of Japan.

    More about this item


    risky asset ratio; liquidity constraint; household portfolio; saving rate;

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment

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