Household asset-holding diversification in Australia

Abstract

We explore asset-holding diversification by Australian households; in particular, the household asset diversification participation decision (whether or not to diversify at all) is jointly estimated with the decision of how much to diversify. In so doing, recent literature on the modelling of proportions is combined with the growing body of research concerning household financial decision-making. Our findings are consistent with the participation of households operating in diverse financial markets being constrained by ineffective information conduits, influencing the decision of whether or not to diversify.