Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/229071
Authors: 
Fleck, Johannes
Monninger, Adrian
Year of Publication: 
2020
Series/Report no.: 
ECB Working Paper No. 2457
Abstract: 
This paper shows that individual beliefs on the effectiveness of formal and informal sources of risk sharing determine financial precautionary behavior. We present empirical evidence demonstrating that higher trust in public insurance systems reduces net liquid wealth while higher trust in communal insurance increases it. This dichotomy is consistent with theories on access to private risk sharing networks. Moreover, we find that both types of trust associate positively with the probability to take on financial risk for the purpose of becoming a homeowner and the related loan-to-value ratio. Our findings are robust across a wide range of econometric controls and specifications.
Subjects: 
Household Saving
Portfolio Liquidity
Public and Communal Insurance
JEL: 
D14
D31
E71
G5
Persistent Identifier of the first edition: 
ISBN: 
978-92-899-4374-1
Document Type: 
Working Paper

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