Do the Rich Get Richer in the Stock Market? Evidence from India

John Campbell and Benjamin Ranish
Authors registered in the RePEc Author Service: Tarun Ramadorai

No 13116, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We use data on Indian stock portfolios to show that return heterogeneity is the primary contributor to increasing inequality of wealth held in risky assets by Indian individual investors. Return heterogeneity increases equity wealth inequality through two main channels, both of which are related to the prevalence of undiversified accounts that own relatively few stocks. First, some undiversified portfolios randomly do well, while others randomly do poorly. Second, larger accounts diversify more effectively and thereby earn higher average log returns even though their average simple returns are no higher than those of smaller accounts.

Keywords: Wealth inequality; Equities; Diversification; India (search for similar items in EconPapers)
Date: 2018-08
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Citations: View citations in EconPapers (4)

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Journal Article: Do the Rich Get Richer in the Stock Market? Evidence from India (2019)
Working Paper: Do the Rich Get Richer in the Stock Market? Evidence from India (2018)
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