Does a Household’s Wealth Determine the Risk Profile of Its Financial Asset Portfolio?

The aim of this study is to identify and analyse the risk profiles of household financial asset portfolios and their determinants in 15 euro area countries. Financial assets relate to deposits, managed accounts, mutual fund units, bonds, shares, private lending, voluntary pension plans and whole life insurance contracts, private businesses, and others. The study uses a fractional multinomial logit model to recognise the importance of safe, relatively safe, and risky components of portfolios for households assigned to 5 wealth classes. The main results prove the primary importance of deposits for households in almost all the member states. Moreover, the features influencing the structure of portfolios lead to conclusions about the greater exposure to financial risks of wealthier respondents than those less affluent. However, the study identifies the countries where contrary preferences characterise households with real assets of high values.