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Title: Do Natural Disaster Experiences Limit Stock Market Participation?
Resulting in 1 citation.
1. Bharath, Sreedhar T.
Cho, DuckKi
Do Natural Disaster Experiences Limit Stock Market Participation?
Journal of Financial and Quantitative Analysis 58,1 (February 2023): 29-70.
Also: https://doi.org/10.1017/S0022109022000680
Cohort(s): NLSY79
Publisher: Cambridge University Press
Keyword(s): Financial Behaviors/Decisions; Geocoded Data; Neighborhood Effects; Regions; Risk-Taking

Permission to reprint the abstract has not been received from the publisher.

We examine whether natural disaster experiences affect households' portfolio choice decisions. Using data from the National Longitudinal Survey of Youth 1979, we find that adversely affected households are less likely to participate in risky asset markets. After a disaster shock, households become more risk-averse and lower their expectations on future stock market returns. Such conservative portfolio choices persist even after households relocate to less disaster-prone areas, consistent with risk preferences being altered by disaster experiences. Overall, our evidence suggests that transient but salient experiences can be an important factor in explaining the limited participation puzzle.
Bibliography Citation
Bharath, Sreedhar T. and DuckKi Cho. "Do Natural Disaster Experiences Limit Stock Market Participation?" Journal of Financial and Quantitative Analysis 58,1 (February 2023): 29-70.