Arbeitspapier
Political uncertainty and household stock market participation
Using micro-level panel data and a difference-in-differences identification strategy, we study the effect of political uncertainty on household stock market participation. We find that households significantly reduce their participation and reallocate funds to safer assets during periods of increased political uncertainty. The decline in participation is related to households' response to elevated asset risk and their incentive to hedge increased labor income risk. In situations where uncertainty remains high after elections, pre-election reduction in participation is only partially reversed, reflecting a prolonged distortion in household stock investments, which can have implications for households, firms, and the economy in general.
- Sprache
-
Englisch
- Erschienen in
-
Series: CFR Working Paper ; No. 21-06
- Klassifikation
-
Wirtschaft
- Thema
-
Political uncertainty
Stock market participation
Portfolio choice
Labor income risk
Asset risk
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Agarwal, Vikas
Aslan, Hadiye
Huang, Lixin
Ren, Honglin
- Ereignis
-
Veröffentlichung
- (wer)
-
University of Cologne, Centre for Financial Research (CFR)
- (wo)
-
Cologne
- (wann)
-
2021
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:43 MEZ
Datenpartner
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Objekttyp
- Arbeitspapier
Beteiligte
- Agarwal, Vikas
- Aslan, Hadiye
- Huang, Lixin
- Ren, Honglin
- University of Cologne, Centre for Financial Research (CFR)
Entstanden
- 2021
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