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Stock Markets or Saving Accounts? The Effects of Liabilities on Households' Risk Appetite

Sarmes, Aleksandra LU (2015) NEKN01 20151
Department of Economics
Abstract (Swedish)
Several researchers have asked themselves the question of why households do not diversify enough as according to theory, and why some households do not even enter the stock markets. This study looks further into this puzzle through a new angle where the focus is on house- holds’ risk appetite – their investment in stocks compared to funds stored in saving accounts. The study asks the question of what affects households to prefer more risk and increase their investments in stocks in relation to savings. In doing so, the emphasis is on the effect of changes in liabilities of the households’ balance sheet, more specifically the study observes the effects of variables related to households’ mortgages, uncollateralized loans and credit- and... (More)
Several researchers have asked themselves the question of why households do not diversify enough as according to theory, and why some households do not even enter the stock markets. This study looks further into this puzzle through a new angle where the focus is on house- holds’ risk appetite – their investment in stocks compared to funds stored in saving accounts. The study asks the question of what affects households to prefer more risk and increase their investments in stocks in relation to savings. In doing so, the emphasis is on the effect of changes in liabilities of the households’ balance sheet, more specifically the study observes the effects of variables related to households’ mortgages, uncollateralized loans and credit- and lease payments. The study focuses on a large data set based on Euro countries and inves- tigates whether there are any differences between wealthier and poorer countries. Lastly, it is also examined whether an increase in stock investment necessarily decreases funds in saving accounts or if these two components move together. The author finds results implying that several of these liabilities do have an effect on households’ risk appetite. The results supple- ment previous findings. It is also found that some differences exist between the Euro coun- tries both when it comes to risk appetite, how they are affected by the different variables and in the movement between stock investment and investment in saving accounts. (Less)
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author
Sarmes, Aleksandra LU
supervisor
organization
course
NEKN01 20151
year
type
H1 - Master's Degree (One Year)
subject
keywords
Euro-countries, Liabilities, Risk, Households
language
English
id
7854961
date added to LUP
2015-09-15 12:36:34
date last changed
2015-09-15 12:36:34
@misc{7854961,
  abstract     = {Several researchers have asked themselves the question of why households do not diversify enough as according to theory, and why some households do not even enter the stock markets. This study looks further into this puzzle through a new angle where the focus is on house- holds’ risk appetite – their investment in stocks compared to funds stored in saving accounts. The study asks the question of what affects households to prefer more risk and increase their investments in stocks in relation to savings. In doing so, the emphasis is on the effect of changes in liabilities of the households’ balance sheet, more specifically the study observes the effects of variables related to households’ mortgages, uncollateralized loans and credit- and lease payments. The study focuses on a large data set based on Euro countries and inves- tigates whether there are any differences between wealthier and poorer countries. Lastly, it is also examined whether an increase in stock investment necessarily decreases funds in saving accounts or if these two components move together. The author finds results implying that several of these liabilities do have an effect on households’ risk appetite. The results supple- ment previous findings. It is also found that some differences exist between the Euro coun- tries both when it comes to risk appetite, how they are affected by the different variables and in the movement between stock investment and investment in saving accounts.},
  author       = {Sarmes, Aleksandra},
  keyword      = {Euro-countries,Liabilities,Risk,Households},
  language     = {eng},
  note         = {Student Paper},
  title        = {Stock Markets or Saving Accounts? The Effects of Liabilities on Households' Risk Appetite},
  year         = {2015},
}