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Life-cycle hypothesis, propensities to save, and demand for financial assets

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  • Jan Tin

Abstract

In recent decades, the United States has not only experienced great economic changes in the financial markets but also undergone tremendous social and demographic transformations. Based on the life-cycle theory of consumption and saving, Keynes’s concept of marginal propensity to save, and Friedman’s theory of asset demand, this study shows that changes in sociodemographic conditions have significant impacts on the saving behavior of individuals in the financial markets. Findings indicate that the amounts of savings held in financial institutions for transactions, precautionary, and speculative motives differ substantially among individuals with divergent socio-economic characteristics. Regression results also show that individuals with different demographic backgrounds differ greatly in their propensities to save and hold financial assest with different degrees of liquidity and risk. Copyright Springer 2000

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  • Jan Tin, 2000. "Life-cycle hypothesis, propensities to save, and demand for financial assets," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 24(2), pages 110-121, June.
    • Handle: RePEc:spr:jecfin:v:24:y:2000:i:2:p:110-121
    DOI: 10.1007/BF02752707
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    1. Ngwenya, Mthunzi A. & Paas, Leonard J., 2012. "Lifecycle effects on consumer financial product portfolios in South Africa: An exploratory analysis of four ethnic groups," Journal of Economic Psychology, Elsevier, vol. 33(1), pages 8-18.
    2. Michelle Maroto, 2018. "Saving, Sharing, or Spending? The Wealth Consequences of Raising Children," Demography, Springer;Population Association of America (PAA), vol. 55(6), pages 2257-2282, December.
    3. Tammy Leonard & Wenhua Di, 2014. "Is Household Wealth Sustainable? An Examination of Asset Poverty Reentry After an Exit," Journal of Family and Economic Issues, Springer, vol. 35(2), pages 131-144, June.
    4. Zachary Winkle & Christiaan Monden, 2022. "Family Size and Parental Wealth: The Role of Family Transfers in Europe," European Journal of Population, Springer;European Association for Population Studies, vol. 38(3), pages 401-428, August.
    5. Izza Mafruhah & Waridin Waridin & Deden Dinar Iskandar & Mudjahirin Thohir, 2019. "Social Engineering Strategy of Entrepreneurship Behavior of Indonesian Migrant Workers During the Placement Period," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(2), pages 50-60.

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