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Population diversity and financial risk-taking

Manthos D. Delis, Evangelos Dioikitopoulos and Steven Ongena

Journal of Banking & Finance, 2023, vol. 151, issue C

Abstract: We hypothesize that financial risk-taking originates in preindustrial interpersonal population diversity. We use data on immigrants residing in the United States and show that controlling for all known determinants of portfolio decisions and more than 100 control variables, diversity in the country of immigrants’ origin positively affects stock market participation and the level of risky asset holdings. Our results remain robust when instrumenting diversity with plant variety. We also identify the channels through which the effect of diversity operates (mostly individualism and human capital), but also conclude that diversity exerts an independent effect.

Keywords: Stock market participation; Equity share; SIPP; Immigrants; Individualism; Scientific knowledge; Financial endowment (search for similar items in EconPapers)
JEL-codes: G41 O16 Z13 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:151:y:2023:i:c:s0378426623000778

DOI: 10.1016/j.jbankfin.2023.106852

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