The effect of fraud experience on investment behavior

Gady Jacoby, Chi Liao, Xiaomeng Lu and Fang Wan

Emerging Markets Review, 2023, vol. 55, issue C

Abstract: Given the recent increases in fraud targeted at households, we examine the effect of household-level fraud experience on investment behavior for a representative sample of Chinese households. Using a difference-in-differences approach with matching, we find that households exposed to fraud are less likely to invest in high-risk assets such as stocks and derivatives and allocate less of their portfolio to high-risk assets. We find that the relationship between fraud experience and investment behavior is driven by households with high risk aversion and not low trust.

Keywords: Fraud; Risk aversion; Trust; Stock market participation, portfolio allocation (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ememar:v:55:y:2023:i:c:s1566014123000122

DOI: 10.1016/j.ememar.2023.101007

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