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Household Portfolio Allocation and Stock Market Impressions: Evidence from Japan Households

Author

Listed:
  • Raslan Alzuabi

    (School of Economics, University of Sheffield, Sheffield S1 4DT, UK)

  • Daniel Gray

    (School of Economics, University of Sheffield, Sheffield S1 4DT, UK)

Abstract

This study investigates the relationship between individual impressions of financial markets and household portfolio decisions in Japan. We analyse data from the Keio Household Panel Survey (KHPS) to examine how impressions about financial markets influence current and planned asset holdings. Initially, our findings reveal statistically and economically significant relationships between distinct impressions and current asset allocations and asset accumulation. The results relating to impressions about profitability and uncertainty remain robust when employing an instrumental variable approach that utilises historical impressions to control for potential endogeneity. Additionally, we explore the influence of current impressions on long-term financial planning, demonstrating their potential importance in shaping future planned asset allocation. These findings suggest that addressing misconceptions and influencing impressions regarding financial markets could potentially improve household financial well-being.

Suggested Citation

  • Raslan Alzuabi & Daniel Gray, 2024. "Household Portfolio Allocation and Stock Market Impressions: Evidence from Japan Households," Working Papers 2024012, The University of Sheffield, Department of Economics.
    • Handle: RePEc:shf:wpaper:2024012
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    File URL: https://www.sheffield.ac.uk/economics/research/serps
    File Function: First version, November 2024
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    More about this item

    Keywords

    Asset allocation; Fractional models; Impressions about the stock market;
    All these keywords.

    JEL classification:

    • A13 - General Economics and Teaching - - General Economics - - - Relation of Economics to Social Values
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions

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