Risky assets in Europe and the US: Risk vulnerability, risk aversion and economic environment

Arbeitspapier

We use cross-country microdata to analyse the risk taking of households in Europe and the US. Concerning the extensive as well as the intensive margin of risky assets, European households differ substantially from US households; but also inside Europe we document substantial differences. Furthermore, average risk aversion is strongly correlated with the share of households holding risky assets across countries. We decompose the observed differences into two parts. A part explainable by household characteristics as well as differences in risk aversion and a remainder. We employ the unexplained part resulting from our microeconometric decomposition analysis together with country-level variables on the economic environment to relate observed differences in risky asset holdings to institutional ones. We find that institutional differences such as shareholder protection are strongly correlated with the unexplainable differences with regard to holdings of risky assets.

Object Details

• ISBN: 978-92-899-3532-6
• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ECB Working Paper ; No. 2270

Classification and Topics

• Classification: Wirtschaft ; Consumer Economics: Empirical Analysis ; Household Saving; Personal Finance ; Personal Income, Wealth, and Their Distributions ; Portfolio Choice; Investment Decisions
• Subject: household finance ; portfolio choice ; background risk ; HFCS ; SCF

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Bekhtiar, Karim ; Fessler, Pirmin ; Lindner, Peter
• Event: Veröffentlichung
• (who): European Central Bank (ECB)
• (where): Frankfurt a. M.
• (when): 2019

Further information

• DOI: doi:10.2866/018078
• Handle: http://hdl.handle.net/10419/208304
• Last update: 10.03.2025, 11:44 AM CET