Financial returns and cultural price determinants on the polish art market, 1991–2012

Abstract

The paper investigates the price determinants, risk/return characteristics and investment performances of the Polish art market. Special attention is given to cultural and historical determinants underlying the creation of the Polish art market after 1989 and the dynamics of changes in the first two decades after the system transition. Data from auction annuals during the years from 1991 to 2012 and repeat-sales regression (RSR) method are used to create the index of 28,951 art transactions. Based on the art index values, we observe that the art index for the Polish auction market exhibits similar returns to the ones on treasury bonds and much lower returns than the ones on the Polish stock and gold prices. The volatility of the art index is, what is striking, much lower than the volatility of stocks, comparable to gold prices and much higher than the volatility of treasury bonds. Moreover, high correlation between art and money market instruments suggests a limited portfolio diversification opportunity.

Prices of works of art by living and deceased artists auctioned in Poland from 1989 to 2012

“…The characteristics of the Polish art market-which differs from the models specific to developed countries-should be taken into consideration whilst analyzing the changes in the prices of the works of art of living and deceased artists. This is due to the fact that the perception of art as an investment is not yet widespread (Białowąs, Potocki, & Rogozińska, 2018). However, a growing interest in the investment aspects of purchasing works of art is noticeable-the awareness of the investment opportunities offered by works of art is increasing among investors (Regmunt, Brożyna, & Michalski, 2017).…”

“…The database was used for creating the art index for the Polish auction market (seeBiałowąs et al, 2018).…”