TY  - UNPD
A1  - Fuchs-Schündeln, Nicola
A1  - Haliassos, Michael
T1  - Does product familiarity matter for participation? : [Version 23 July 2014]
T2  - SAFE working paper series ; No. 63
N2  - Regulation of investor access to financial products is often based on product familiarity indicated by previous use. The underlying premise that lack of familiarity with a product class causes unwarranted participation is difficult to test. This paper uses household-level data from the ‘experiment’ of German reunification that (exogenously) offered to East Germans access to capitalist products (exogenously) unfamiliar to them. We compare the evolution of post-unification participation of former East and West Germans in financial products, controlling for relevant household characteristics. We vary familiarity differentials by considering (i) both unfamiliar ‘capitalist’ products (stocks, bonds, and consumer credit) and ones available in the East (savings accounts and life insurance); and (ii) cohorts with different exposure to capitalism. We find that East Germans participated immediately in unfamiliar risky securities, at rates comparable to West Germans of similar characteristics. They phased out disproportionate participation in previously familiar assets as familiarity with capitalist products grew. They were more likely to use consumer debt, partly to catch up with richer new peers. We find no signs of abrupt participation drops that could suggest mistakes or regret related to lack of familiarity.
T3  - SAFE working paper - 63 
KW  - household finance
KW  - familiarity
KW  - financial literacy
KW  - stockholding
KW  - household debt
KW  - social interactions
KW  - consumer credit
KW  - counterfactual analysis
KW  - German reunification
Y1  - 2014
UR  - http://publikationen.ub.uni-frankfurt.de/frontdoor/index/index/docId/34747
UR  - https://nbn-resolving.org/urn:nbn:de:hebis:30:3-347477
UR  - http://ssrn.com/abstract=2473572
IS  - rev. vers. 23 July 2014
PB  - SAFE
CY  - Frankfurt am Main
ER  -