Wealth Redistribution in Bubbles and Crashes

Dong Lou

No 15029, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Using comprehensive administrative data from China, we document a substantial increase in inequality of wealth held in risky assets 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 groups in 2012-14, a period of a relatively calm market, is an order of magnitude smaller. We examine a number of possible explanations for these findings and discuss their implications.

Keywords: Bubbles and crashes; Social impact; 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: 2020-07
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Citations: View citations in EconPapers (2)

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