Does product familiarity matter for participation?

Arbeitspapier

Household access to financial products is often conditioned on previous use. However, banning access when learning is possible may be discriminatory or counterproductive. The 'experiment' of German reunification (exogenously) offered to East Germans unconditional access to (exogenously) unfamiliar capitalist products. Controlling for characteristics, East Germans participated immediately, were as likely to use unfamiliar risky securities as West Germans, and more likely to use consumer debt, without signs of regret. Our results suggest that mistakes of unfamiliar households can be prevented by a knowledgeable and well-incentivized financial sector and by interaction with familiar peers. This implies that regulation should refocus on the financial sector rather than on prohibiting individuals to gain familiarity with financial products.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: SAFE Working Paper ; No. 63

Classification and Topics

• Classification: Wirtschaft ; Portfolio Choice; Investment Decisions ; Macroeconomics: Consumption; Saving; Wealth
• Subject: Household finance ; familiarity ; regulation ; investor protection ; financialliteracy ; stockholding ; household debt ; consumer credit ; social interactions ; counterfactual analysis ; German reunification

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Fuchs-Schündeln, Nicola ; Haliassos, Michael
• Event: Veröffentlichung
• (who): Goethe University Frankfurt, SAFE - Sustainable Architecture for Finance in Europe
• (where): Frankfurt a. M.
• (when): 2015

Further information

• DOI: doi:10.2139/ssrn.2473572
• Handle: http://hdl.handle.net/10419/203281
• Last update: 10.03.2025, 11:44 AM CET