Household willingness to take financial risk: Stockmarket movements and life‐cycle effects

Buly Cardak and Vance Martin

Journal of Banking & Finance, 2023, vol. 149, issue C

Abstract: Using panel data on Australian households, the relationship between risk tolerance and past stock returns is investigated across economic and financial cycles, as well as over the life-cycle and across generations. Risk tolerance is found to be procyclical with stock returns over an eight year horizon. The empirical results also reveal an inverted J-curve age risk profile, and the presence of a longer cycle across generations. Results are robust to controlling for financial crises, return volatility, real estate returns and home bias.

Keywords: Risk tolerance; Stockmarket movements; Life-cycle effects; Home bias (search for similar items in EconPapers)
JEL-codes: D14 D80 E21 G50 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:149:y:2023:i:c:s0378426622003326

DOI: 10.1016/j.jbankfin.2022.106752

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