We study the role of household saving behaviour, of individual motives for saving and that of perceived liquidity constraints on household finances in the 15 Euro Area countries. The empirical analysis is based on the Household Finance and Consumption Survey (HFCS), a new harmonized data set collecting detailed information on wealth holdings, consumption and income at the household level. We find evidence of some degree of homogeneity across countries with respect to saving preferences and the relative importance of alternative motives for saving. In addition we find a more heterogeneous impact of credit constraints, that are perceived to be binding for specific groups of respondents and geographic regions. Both household characteristics and institutional macroeconomic variables are significant and economically important determinants of household saving preferences and of the credit constraints they face. These findings have relevant policy implications if interpreted in light of the recent financial crisis, the country-specific institutional settings, and the different degree of development of formal lending channels.Jel-Classification: C8; D12; D14; D91

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for helpful comments. MEA is a research institute which is funded by two thirds through public third-party means for which we are very grateful. Furthermore, we would like to thank the state of Baden-Württemberg and the German Insurance Association for the basic funding of MEA. We are particularly grateful to the German Research Foundation (Deutsche Forschungsgemeinschaft) for financing the SAVE survey.† MEA and CDSE, University of Mannheim, 68131 Mannheim, Germany; e-mail: bucher@mea.unimannheim.de.‡ MEA, University of Mannheim, 68131 Mannheim, Germany; e-mail: ziegelmeyer@mea.unimannheim.de. AbstractWe study how and to what extent private households are affected by the recent financial crisis and how their financial decisions are influenced by this shock. Our analysis reveals that individuals with low levels of financial literacy are less likely to have invested in the stock market and thus are less likely to report losses in wealth.Yet, individuals with low financial literacy are more likely to sell their assets which lost in value (realize losses). This reaction to short-term losses has potential longterm consequences if individuals do not participate in markets' recovery and face lower returns in the long run.