“Open line of credit:” Under no borrowing constraints, how do young adults invest?

Michael Insler (), Pamela Schmitt () and Jake Compton ()
Additional contact information
Jake Compton: United States Navy

Departmental Working Papers from United States Naval Academy Department of Economics

Abstract: Students at the United States Naval Academy have the opportunity to take a “Career Starter Loan.” Two military-oriented banks provide these loans exogenously at a low interest rate that does not depend on individual credit scores. Using survey data, this paper examines investment behavior in relation to risk profiles, self-reported planning horizons, and other individual characteristics. The data offers novel insights into the investment behavior of college-aged individuals, an infrequently studied group in behavioral finance. Simple OLS and Tobit models reveal that: (1) cognitive ability is strongly and positively associated with more investment and riskier choices; (2) demographic background characteristics relate to investment behavior, as respondents from wealthier backgrounds invest more and with more risk; (3) individuals with superior financial literacy tend to invest more, typically in equity markets; (4) personality traits, such as the Myers-Briggs Type Indicator and planning horizon length, can also predict investment behavior. Lastly, we explore a notion of “investment exuberance” to see which factors might relate to young investors’ confidence in their choices.

Pages: 40 pages
Date: 2013-03
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.usna.edu/EconDept/RePEc/usn/wp/usnawp41.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 500 Can't connect to www.usna.edu:80 (A connection attempt failed because the connected party did not properly respond after a period of time, or established connection failed because connected host has failed to respond.)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:usn:usnawp:41

Access Statistics for this paper

More papers in Departmental Working Papers from United States Naval Academy Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by ().