Work

Financial Literacy and Portfolio Dynamics

Year: 2017

Type: article

Abstract: ABSTRACT We match administrative panel data on portfolio choices with survey measures of financial literacy. When we control for portfolio risk, the most literate households experience 0.4% higher annual returns than the least literate households. Distinct portfolio dynamics are the key determinant of this difference. More literate households hold riskier positions when expected returns are higher, they more actively rebalance their portfolios and do so in a way that holds their risk exposure relatively constant over time, and they are more likely to buy assets that provide higher returns than the assets that they sell.

Source: The Journal of Finance

DOI: 10.1111/jofi.12605

Author: MILO BIANCHI

Institutions: Toulouse School of Economics, Université de Toulouse, Université Toulouse Capitole

Language: English

Topic: Financial Literacy, Pension, Retirement Analysis

Subfield: Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

Open Access status: green

Funder: Agence Nationale de la Recherche

Award: Toulouse Graduate School défis en économie et sciences sociales quantitatives