An economic analysis of the factors affecting household financial asset allocation decisions

Cunningham, Allison Elizabeth
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University of Guelph

This thesis is an investigation of how economic variables affect household financial asset allocation decisions. Data from the 1998 U.S. Survey of Consumer Finances is employed. The neoclassical model of utility maximization provides the conceptual framework. Results indicate a positive relationship between PROP (the proportion of total financial assets (FA) allocated to stocks) and the wealth of the household, but no statistically significant relationship between PROP and household income was found. Other variables found to have a substantial influence on financial asset allocation decisions within a household's total financial asset holdings (stocks and mutual funds) include risk, occupational status, one educational variable (BACH), and one age variable (FIFTY).

economic variables, household, financial asset holdings, allocation decisions, proportion of total financial assets, stocks, household wealth, household income