Portfolio flows and household portfolios

In this paper, we show that cross-border portfolio flows around the peak of the European Crisis induced households to rebalance their portfolios towards housing. Estimating difference-in-differences regressions around Draghi’s “Whatever It Takes” speech in July 2012 with household data from the ECB’...

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Bibliographic Details
Published in:European economic review 2025-02, Vol.172, p.104904, Article 104904
Main Authors: Boddin, Dominik, te Kaat, Daniel Marcel, Ma, Chang, Rebucci, Alessandro
Format: Article
Language:English
Subjects:
Capital flows
Credit channel
Household portfolio rebalancing
Portfolio flows
Real estate
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Summary:In this paper, we show that cross-border portfolio flows around the peak of the European Crisis induced households to rebalance their portfolios towards housing. Estimating difference-in-differences regressions around Draghi’s “Whatever It Takes” speech in July 2012 with household data from the ECB’s Household Finance and Consumption Survey, we find that portfolio inflows induce households with larger ex-ante bond and equity shares to rebalance more strongly towards housing. The effect is not driven by higher pre-treatment access to credit or higher credit growth during the treatment period and is stronger for wealthier and less risk-averse households.
ISSN:0014-2921
DOI:10.1016/j.euroecorev.2024.104904