The Effects of Transaction Costs on Households' Financial Asset Demands

The effects of retail transaction costs on households' financial transactions are examined using data on households' holdings of broad classes of financial assets. These classes include: 1. small time and saving deposits at deposit-type institutions, 2. large time deposits, 3. US Treasury...

Full description

Saved in:
Bibliographic Details
Published in:Journal of money, credit and banking credit and banking, 1991-08, Vol.23 (3), p.383-409
Main Author: Hess, Alan C.
Format: Article
Language:English
Subjects:
Bank assets
Coefficients
Costs
Demand curves
Economic models
Economic theory
Endowments
Expected rate of return
Financial assets
Financial portfolios
Household savings
Households
Investment return rates
Money, Credit, and Banking Lecture
Portfolio investments
Portfolio management
Studies
Transaction costs
Transactions
Wholesale trade
Citations: Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:The effects of retail transaction costs on households' financial transactions are examined using data on households' holdings of broad classes of financial assets. These classes include: 1. small time and saving deposits at deposit-type institutions, 2. large time deposits, 3. US Treasury securities, 4. corporate bonds, 5. money market mutual funds, 6. municipal bonds, 7. mortgages, and 8. corporate equities. The results provide evidence that the transaction costs that households incur when they buy and sell financial assets are statistically significant and economically important. Over the sample period 1970 through 1986, they caused large reductions in the quantity of transactions undertaken by households, which resulted in households bearing large amounts of uncompensated diversifiable risk.
ISSN:0022-2879
1538-4616
DOI:10.2307/1992752