Return expectations and risk aversion heterogeneity in household portfolios

Bucciol, Alessandro; Miniaci, Raffaele; Pastorello, Sergio

doi:10.1016/j.jempfin.2016.08.002

Cited by 22 publications

(5 citation statements)

References 45 publications

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“…According to Grable and Lytton (1999) and Hallahan et al (2004), financial risk tolerance can be measured using subjective judgments. In this study, the measurement of financial risk tolerance adapted a statement by Bucciol et al (2017), which reflects a person's perception of a willingness to take possible losses or opportunities to gain profits on the amount of money invested. However, according to Grable and Lytton (1999), the appropriate measurement for financial risk tolerance is to use subjective measurements that are specifically formulated using various scenarios and situations.…”

Section: Resultsmentioning

confidence: 99%

Market discipline in the behavioral finance perspective: a case of Sharia mutual funds in Indonesia

Widyastuti

Febrian

Sutisna

et al. 2021

JIABR

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Purpose This study aims to determine antecedents of market discipline. A model was constructed by extending the theory of planned behavior (TPB) to explore the cognitive, psychological and social factors that influence the market discipline in the form of withdrawal behavior. Design/methodology/approach This study applied a quantitative approach by surveying 181 Indonesian retail investors in Sharia mutual funds, which were represented by civil servants. The samples were collected using the purposive sampling technique. This study used the partial least square–structural equation model to analyze the data. Findings The results revealed that the Islamic financial literacy, the attitudes toward withdrawal, the subjective norms and the perceived behavioral control had a positive significant effect on the withdrawal intention, whereas financial risk tolerance had an insignificant impact. Then, all the exogenous variables and intention to withdraw had a significant contribution in explaining market discipline. Contrary to the proposed hypothesis, the attitude toward withdrawal had a negative impact on market discipline. The structural model indicated that the TPB could be extended by adding some exogenous variables (i.e. Islamic financial literacy and financial risk tolerance) in determining the intention to withdraw and withdrawal behavior, which indicated the market discipline in Sharia mutual funds. Research limitations/implications This study was limited to individual investors who work as civil servants. This study did not accommodate different demographic factors such as age and gender, which influence fund withdrawal behavior. Practical implications The government must focus on the inclusion of market discipline in Sharia mutual funds’ regulation to encourage the risk management disclosure, specifically that related to Sharia compliance. Originality/value Previous studies applied a traditional finance theory to predict market discipline, but this study contributes to filling the theoretical gap by explaining the market discipline from a behavioral finance perspective that was found in Sharia mutual funds.

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Section: Resultsmentioning

confidence: 99%

Market discipline in the behavioral finance perspective: a case of Sharia mutual funds in Indonesia

Widyastuti

Febrian

Sutisna

et al. 2021

JIABR

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“…Retirement is a crucial life stage that impacts household asset decisions and has the potential to affect participants’ willingness to take risks in the financial markets. According to several studies, investors who are retired are more risk-averse ( 47 ). Because of this, households headed by people over 60 tend to be naturally risk cautious and prefer low-risk financial products, which are less influenced by health risks and medical insurance.…”

Section: Theoretical Analysis and Research Hypothesismentioning

confidence: 99%

Medical insurance, health risks, and household financial asset allocation: evidence from China household finance survey

Li,

Zhai

et al. 2023

Front. Public Health

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There is a lack of micro evidence on whether medical insurance may optimize the household financial asset allocation by transferring health risk, despite the fact that health risk is a significant component driving families’ precautionary savings. This article empirically examines the impact of health risk and social medical insurance on household risky financial asset allocation using a Probit model, based on data from the 2015–2019 China Household Finance Survey (CHFS). The findings indicate that social medical insurance, with its lower level of security, reduces the likelihood, but it can alter households’ preferences for risk by lowering marginal effect of health risk. According to the findings of the heterogeneity analysis, people who live in rural and less developed areas are more likely to experience the risk-inhibiting effects of social medical insurance and health risk. The eroding and risk-suppressing impacts of social medical insurance are likewise less pronounced for households headed by women and older people, as is the health risk’s suppressive influence on household involvement in risky financial markets. Compared with social medical insurance, commercial medical insurance with a higher level of coverage can dramatically increase household participation in riskier financial markets. This article provides micro-empirical evidence for the household asset allocation effect of medical insurance.

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“…Education level also affects intergenerational differences in family income (Liu & Faye, 2021); there is a large difference in choices related to risky financial assets between married and single people. Addoum et al (2017) found that the investments in stocks of retired couples tended to decrease significantly, while those of single people did not change significantly; it was also shown that men are more willing to assume risks than women, and their investment-error tolerance rate is higher (Bucciol et al, 2017;Guiso & Zaccaria, 2021). Mumtaz and Smith (2021) found that different demographics engage in different behaviours; regional financial development can promote investment by families in risky assets by reducing market friction on the supply side and improving families' financial literacy on the demand side (Lu et al, 2019).…”

Section: Data and Variablesmentioning

confidence: 99%

Age structure of the population and the choice of household financial assets

Kang

2021

Economic Research-Ekonomska Istraživanja

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China is undergoing changes in its demographic structure, and the burden of raising children and caring for the elderly is negatively affecting the welfare of Chinese families. Optimising the financial structure of households may be an effective solution. Using data from the 2017 Chinese Household Finance Survey, in this study, we empirically analyse how the age structure of the population affects a household's finances by applying probit and tobit models. It was found that an increase in the proportion of infants in a family has a crowding-out effect on its investment in risky and deposit assets, and an increase in the proportion of elderly family members encourages the replacement of risky assets with savings. Further mechanism tests showed that the presence of infants affects the choice of financial assets by crowding a family's labour or leisure time, increasing expenditures, and changing a family's cash demand, while the presence of the elderly changes household finances because a family's risk preferences are altered by the weakened cognitive abilities of the elderly. Finally, in this article, we advance some policy suggestions, such as regulating capital market management, increasing birth subsidies, and improving the financial literacy of the elderly, to ensure future pension security.

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Return expectations and risk aversion heterogeneity in household portfolios

Cited by 22 publications

References 45 publications

Market discipline in the behavioral finance perspective: a case of Sharia mutual funds in Indonesia

Market discipline in the behavioral finance perspective: a case of Sharia mutual funds in Indonesia

Medical insurance, health risks, and household financial asset allocation: evidence from China household finance survey

Age structure of the population and the choice of household financial assets

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