Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/119506
Authors: 
Barasinska, Nataliya
Schäfer, Dorothea
Stephan, Andreas
Year of Publication: 
2009
Series/Report no.: 
FINESS Working Paper D.6.1A
Abstract: 
This paper explores the relationship between self-declared risk aversion of private investors and their willingness to hold diversified portfolios of financial assets. The analysis is based on household survey data from the German Socioeconomic Panel (SOEP) that provides a reliable measure of individual attitude towards financial risk. Our empirical findings suggest that more risk averse investors tend to hold incomplete portfolios that consist mainly of a few safe assets. We also find that for private households the propensity to diversify is highly dependent on whether liquidity and safety needs are satisfied.
Subjects: 
household finances
asset portfolio
diversification
risk aversion
JEL: 
D14
G11
Document Type: 
Working Paper

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