Wealth redistribution in bubbles and crashes

Li An, Dong Lou and Donghui Shi

Journal of Monetary Economics, 2022, vol. 126, issue C, 134-153

Abstract: What are the social-economic consequences of financial market bubbles and crashes? Using novel comprehensive administrative data from China, we document a substantial increase in inequality of wealth held in equity by Chinese households in the 2014–15 bubble-crash episode: the largest 0.5% households in the equity market gain, while the bottom 85% lose, 250B RMB through active trading in this period, or 30% of either group's initial equity wealth. In comparison, the return differential between the top and bottom household groups in 2012–14, a period of a relatively calm market, is on the order of 1 to 3%. We examine several possible explanations for these findings and discuss their broader implications.

Keywords: Bubbles and crashes; Investment skills; Wealth inequality; Market participation (search for similar items in EconPapers)
JEL-codes: D14 D31 D91 G11 G51 O16 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:moneco:v:126:y:2022:i:c:p:134-153

DOI: 10.1016/j.jmoneco.2022.01.001

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