Individuals’ financial risk-taking and peer influence

Jörgen Hellström, Oscar Stålnacke and Rickard Olsson

The Quarterly Review of Economics and Finance, 2022, vol. 86, issue C, 1-17

Abstract: Individual investor’s risky asset share, as well as stock market participants’ choice of total- and systematic stock portfolio risk, are found to be affected by financial risk-taking among peers. Furthermore, the results indicate that the influence of peers is stronger for less wealthy, for those with relatively higher disposable incomes, and for male investors, respectively. The results, obtained using an instrumental variable approach based on analysis of detailed individual level data, are robust towards a number of competing explanations and stress that interaction with peers’ is an important channel through which individuals’ overall financial risk-taking is affected.

Keywords: Individual investors; Social interaction; Portfolio choice; Stock market (search for similar items in EconPapers)
JEL-codes: D03 D14 D83 G02 G11 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:eee:quaeco:v:86:y:2022:i:c:p:1-17

DOI: 10.1016/j.qref.2022.05.001

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