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Financial Risk Propensity, Business Cycles and Perceived Risk Exposure
Author(s) -
Bucciol Alessandro,
Miniaci Raffaele
Publication year - 2018
Publication title -
oxford bulletin of economics and statistics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.131
H-Index - 73
eISSN - 1468-0084
pISSN - 0305-9049
DOI - 10.1111/obes.12193
Subject(s) - propensity score matching , recession , portfolio , economics , financial risk , panel data , market risk , stock market , stock (firearms) , actuarial science , finance , econometrics , medicine , mechanical engineering , paleontology , horse , keynesian economics , engineering , biology
We analyse whether individual financial risk propensity changes over time with background financial conditions, as well as personal and subjective portfolio risk exposure. We elicit risk propensity from six different self‐assessed facets collected in a long panel data set from the DNB Household Survey, annually covering the period 1995–2015. Risk propensity is generally higher during periods of economic growth and lower during periods of recession, but is untrended when elicited, using questions referring to safe investments. Our risk propensity measure is also higher following positive stock market returns or subjectively large risk exposure in own past investments.