Working Paper: CEPR ID: DP2549
Authors: Luigi Guiso; Tullio Jappelli
Abstract: We provide a detailed account of the portfolio of Italian households and its evolution, using repeated cross-sectional and panel data drawn from the 1989-95 Bank of Italy Survey of Household Income and Wealth. We offer an in-depth description of the lifetime pattern of asset holdings and their composition, the degree of asset diversification, and the propensity to invest in risky assets. The data also allow us to address some more fundamental issues on the determinants of household portfolios. We look at portfolio mobility and elaborate on the relevance of entry and exit costs. We also provide new evidence on the effect of income risk and information acquisition on portfolio choice.
Keywords: diversification; information; portfolio choice; portfolio mobility
JEL Codes: D80; E20; G10
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Higher transaction costs (D23) | Lower participation in risky assets (G19) |
| Lower transaction costs (D23) | Increased participation in risky assets (G11) |
| Higher education levels (I23) | Increased participation in risky assets (G19) |
| Higher background risk (I12) | Lower propensity to invest in risky assets (G11) |
| Wealth (D31) | Increased portfolio diversification (G11) |
| Increased participation rates (I24) | Increased participation in risky assets (G11) |
| Greater access to information (L96) | Increased participation in risky assets (G19) |
| Higher wealth (D31) | Higher share of risky assets (G19) |