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Household Risk Taking after the Financial Crisis

Sarah Necker () and Michael Ziegelmeyer ()

No 85, BCL working papers from Central Bank of Luxembourg

Abstract: This study investigates whether and how the crisis in 2008/2009 affects households' risk attitudes, subjective risk and return expectations, and planned financial risk taking using the German SAVE study. Households' wealth change from end-2007 to end-2009 is not found to have an effect. However, households that attribute losses to the crisis decreased their risk tolerance and planned risk taking; the probability of expecting an increase in risks and returns is raised. According to economic theory, wealth changes attributed to a dramatic event should not have a different effect than other wealth changes. The results suggest an emotional reaction.

Keywords: Financial and economic crisis; risk preferences; stock market expectations; wealth fluctuations; emotions (search for similar items in EconPapers)
JEL-codes: D81 D14 G11 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-sog and nep-upt
Date: 2014-02
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http://www.bcl.lu/fr/Recherche/publications/cahiers_etudes/85/BCLWP085.pdf (application/pdf)

Related works:
Journal Article: Household risk taking after the financial crisis (2016) Downloads
Working Paper: Household Risk Taking after the Financial Crisis (2014) Downloads
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