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

Dieses Objekt wird bereitgestellt von:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.

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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