Households Expectations and Investing in Safe and Risky Financial Assets

Drawing upon data from the European Commission's consumer survey, this paper examines how four types of household expectations affect household financial portfolio decisions in the three largest euro area countries: Germany, France, and Italy. Focus is placed on the dynamic response of the shar...

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Bibliographic Details
Published inFinance a úvěr Vol. 70; no. 5; pp. 431 - 460
Main Author Dajcman, Silvo
Format Journal Article
LanguageEnglish
Published Prague Charles University, Faculty of Social Sciences 01.01.2020
Subjects
Consumer behavior
Consumers
Consumption
Economic conditions
Equity
Equity funds
Eurozone
Households
Interest rates-deposits
Investments
Liquid assets
Literature reviews
Macroeconomics
Polls & surveys
Securities markets
Stock exchanges
Italy
France
United States > US
Germany
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Summary:Drawing upon data from the European Commission's consumer survey, this paper examines how four types of household expectations affect household financial portfolio decisions in the three largest euro area countries: Germany, France, and Italy. Focus is placed on the dynamic response of the shares of safe (currency and transferable deposits) and risky (equity and investment fund shares) financial assets in relation to the total value of financial assets held by the household sector to the shocks in expectations. The results illustrate that expectations are an important determinant of household financial portfolio decisions. In general, in response to improved expectations, households increase the share of risky assets and reduce the share of safe assets. However, country and expectations-type specific differences were observed. The effects of income, prices level, deposit rate and stock price shocks on the household financial portfolio are also documented and compared and the economic policy and financial industry implications of the results are discussed.
ISSN:0015-1920
2464-7683