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Institutional reform and depositors' portfolio choice evidence from bank account data

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  • Berlemann, Michael
  • Luik, Marc-André

Abstract

In this paper we employ the natural experiment of German Division and Reunification in order to study the effect of institutional reform on the decision to hold risky assets. We present empirical evidence indicating that even 16 years after German Reunification risky portfolios of East and West German bank customers differed systematically, even after controlling for wealth and other socio-demographic factors. While these differences are especially pronounced for bank customers with experiences in the former communist system, even the younger generation of East Germans still differs remarkably from their West German counterparts in terms of risky asset choice. Thus, informal institutions tend to have long-lasting effects on portfolio behavior.

Suggested Citation

  • Berlemann, Michael & Luik, Marc-André, 2026. "Institutional reform and depositors' portfolio choice evidence from bank account data," HWWI Working Paper Series 1/2026, Hamburg Institute of International Economics (HWWI).
    • Handle: RePEc:zbw:hwwiwp:338126
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