The diversity of household assets holdings in the United States in 2007 and 2009: measurement and determinants

Abstract

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Crisis Impact on the Diversity of Financial Portfolios - Evidence from European Citizens

“…The value share of risky assets behaved similarly and made up for 0.04% of assets value before the crisis and 0.4% in 2011/2012. These shares differ strongly from the findings in Sierminska and Silber (2019) for US household portfolios. Their post Lehman insolvency wave covers 2009 and they calculate a 13.9% share of safe assets and a 13.2% share of fairly safe assets.…”

“…The increase in ownership rates of safe assets and the reduction in fairly safe assets as well as risky assets is statistically significant. Table 4 here Again, the observed rates reveal a considerable contrast to the US evidence in Sierminska and Silber (2019). In 2009, 43.0% of households in the US sample possessed fairly safe assets and 74.3% owned any amount of risky assets.…”

“…Market conditions change most significantly in a deep financial and economic crisis. Sierminska and Silber (2019) study the influence of the 2008 financial crisis on US household portfolios. Using different entropy indices and the Gini-Simpson indicator, they quantify how the diversity of financial portfolios changed in response to both the crisis and breaking events in personal lives such as divorce or unemployment.…”

“…Another finding is that socio-demographic parameters, such as age, education, income and wealth, as well as the life events, marriage or divorce, affect the diversity in US portfolios. Sierminska and Silber (2019) report that households in different deciles of the wealth distribution show different degrees of diversity in their portfolios. Hence, wealth changes caused by the GFC are likely to cause portfolio adjustments.…”

“…One exception is Dimmock, Kouwenberg, Mitchell, and Peijnenburg (2016), who find that the financial crisis increased the probability of ambiguity-averse US individuals to sell stocks. Another exception is Sierminska and Silber (2019), who study how US individuals adjusted their financial portfolios after the Lehman shock. We focus on European households.…”