Household Portfolio Allocation and Stock Market Impressions: Evidence from Japan Households

Raslan Alzuabi () and Daniel Gray ()
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Raslan Alzuabi: School of Economics, University of Sheffield, Sheffield S1 4DT, UK
Daniel Gray: School of Economics, University of Sheffield, Sheffield S1 4DT, UK

No 2024012, Working Papers from The University of Sheffield, Department of Economics

Abstract: This study investigates the relationship between individual impressions of financial markets and household portfolio decisions in Japan. We analyse data from the Keio Household Panel Survey (KHPS) to examine how impressions about financial markets influence current and planned asset holdings. Initially, our findings reveal statistically and economically significant relationships between distinct impressions and current asset allocations and asset accumulation. The results relating to impressions about profitability and uncertainty remain robust when employing an instrumental variable approach that utilises historical impressions to control for potential endogeneity. Additionally, we explore the influence of current impressions on long-term financial planning, demonstrating their potential importance in shaping future planned asset allocation. These findings suggest that addressing misconceptions and influencing impressions regarding financial markets could potentially improve household financial well-being.

Keywords: Asset allocation; Fractional models; Impressions about the stock market (search for similar items in EconPapers)
JEL-codes: A13 C33 C35 D14 G11 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2024-11
New Economics Papers: this item is included in nep-ban
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Persistent link: https://EconPapers.repec.org/RePEc:shf:wpaper:2024012

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