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Peer effects, personal characteristics and asset allocation

Author

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  • Zhang, Annie C.
  • Fang, Jiali
  • Jacobsen, Ben
  • Marshall, Ben R.

Abstract

We study the relative importance of social factors (including household, workplace, and neighborhood peer effects) and personal characteristics (including age, gender, tax rates, and funds under management) for asset allocation decisions. The most important factors (in order) are household peer effects, personal characteristics and workplace peer effects. Neighborhood peer effects and financial advice play a less important role. We use instrumental variables for both household and workplace peer effects and find results that are consistent with causal peer effects.

Suggested Citation

  • Zhang, Annie C. & Fang, Jiali & Jacobsen, Ben & Marshall, Ben R., 2018. "Peer effects, personal characteristics and asset allocation," Journal of Banking & Finance, Elsevier, vol. 90(C), pages 76-95.
    • Handle: RePEc:eee:jbfina:v:90:y:2018:i:c:p:76-95
    DOI: 10.1016/j.jbankfin.2018.03.001
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    2. Huber, Christoph & Huber, Jürgen & Hueber, Laura, 2019. "The effect of experts’ and laypeople’s forecasts on others’ stock market forecasts," Journal of Banking & Finance, Elsevier, vol. 109(C).
    3. Hu, Yuanyuan & Fang, Jiali, 2022. "Peer Effects in Directors’ and Officers’ Liability Insurance: Evidence from China," Finance Research Letters, Elsevier, vol. 47(PB).
    4. Fang, Jiali & Liu, Na & de Bruin, Anne & Wongchoti, Udomsak, 2022. "The salience of children to household financial decisions," Journal of Banking & Finance, Elsevier, vol. 139(C).
    5. Jiali Liu & Xinran Xie & Yu Duan & Liang Tang, 2023. "Peer effects and the mechanisms in corporate capital structure: evidence from Chinese listed firms," Oeconomia Copernicana, Institute of Economic Research, vol. 14(1), pages 295-326, March.
    6. Huang, Bin & Wang, Bin & Chen, Zixuan, 2024. "Individual investment adaptations to COVID-19 lockdowns," The North American Journal of Economics and Finance, Elsevier, vol. 70(C).
    7. Xiaoli, Gan & xiaoyi, Zhang & Xiaoyang, Ma & Khalid, Fahad, 2023. "Impact of financial environment on household risk financial asset selection: A micro perspective," International Review of Economics & Finance, Elsevier, vol. 85(C), pages 137-145.
    8. Pelster, Matthias, 2019. "Attracting attention from peers: Excitement in social trading," Journal of Economic Behavior & Organization, Elsevier, vol. 161(C), pages 158-179.
    9. Hanvedes Daovisan & Thanapauge Chamaratana, 2018. "Confirmatory Factor Analysis of Assets That Influence Informal Garment Workers’ Livelihood Security in Laos," Societies, MDPI, vol. 8(3), pages 1-11, June.
    10. Xiaobo Xu & Jiali Fang & Martin Young & Liping Zou, 2024. "The impact of post‐retirement financial market participation on retirement income sufficiency in Australia," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 64(1), pages 903-939, March.
    11. Si Shi & Yawen Jiang, 2022. "Does supplemental private health insurance incentivize household risky financial asset investment? Evidence from the China Household Financial Survey," International Journal of Health Economics and Management, Springer, vol. 22(4), pages 369-421, December.
    12. Hua Guo & Yang Zhang & Yanling Peng & Tong Luo & Hong Wang, 2022. "Does COVID-19 Affect Household Financial Behaviors? Fresh Evidence From China," SAGE Open, , vol. 12(3), pages 21582440221, August.
    13. Zhang, Haolin & Feng, Yongqi & Wang, Ying & Ni, Juan, 2024. "Peer effects in corporate financialization: The role of Fintech in financial decision making," International Review of Financial Analysis, Elsevier, vol. 94(C).

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    More about this item

    Keywords

    Asset allocation; Behavioral finance; Financial advice; Household finance; Individual investors; Mutual funds; Personal characteristics; Peer effects; Social;
    All these keywords.

    JEL classification:

    • G02 - Financial Economics - - General - - - Behavioral Finance: Underlying Principles
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance

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