measure income risk as the observed variation of household income over a five year period. We find that indeed higher income … theory suggests that with increasing labor income risk, the reluctance of households to hold stocks increases. We propose to … risk reduces the propensity to invest in stocks. However, when controlling for household heterogeneity as well as …

category. Background risk exerts a significant impact on household portfolios, resulting in a 'flight from risk', away from …Analysing the US Panel Study of Income Dynamics, we present a new empirical method to investigate the extent to which … households reduce their financial risk exposure when confronted with background risk. Our novel modelling approach – termed a …

We develop a methodology to estimate households’ exposure to systematic income risk and its causal effect on portfolio … substantial cross-sectional variation in systematic income risk. We find that households more exposed to business cycle … decisions. The identification strategy relies on household fixed effects and a novel instrument based on major corporate events …

Assuming a risk-neutral bank and assuming household utility to be exponential, we show how under information symmetry … the covariance of income and loan repayments may explain higher household borrowings than in the case without default … that in a situation in which a household without default option would neither borrow nor save, the existence of a default …