Participation Following Sudden Access
46 Pages Posted: 27 Mar 2019 Last revised: 2 Mar 2020
There are 6 versions of this paper
Participation Following Sudden Access
Does Product Familiarity Matter for Participation?
Does Product Familiarity Matter for Participation?
Participation Following Sudden Access
Participation Following Sudden Access
Does Product Familiarity Matter for Participation?
Date Written: March 2019
Abstract
The German reunification experiment provided sudden access to previously unavailable financial products, supported by knowledgeable practitioners. This setting offers new perspectives on participation, inertia, and product diffusion. Controlling for characteristics, East Germans experienced a jump in securities participation to a level comparable to West Germans' participation immediately following reunification, and to an even higher level for consumer debt, while exhibiting inertia in previously accessible products. They showed no signs of subsequent retreat. Lower financial resources are the most important characteristic explaining lower East German participation in all asset classes, while expectations and peer effects drive the higher East German debt participation.
Keywords: financial market participation, German reunification, household finance, inertia
JEL Classification: E21, G11, G5
Suggested Citation: Suggested Citation