Stock market participation: Family responses to housing consumption commitments

B Chen, FP Stafford - Journal of Money, Credit and Banking, 2016 - Wiley Online Library
B Chen, FP Stafford
Journal of Money, Credit and Banking, 2016Wiley Online Library
As of 2007, many households had taken on very substantial commitments to housing and
companion mortgage payments. At the same time they held little in the way of a traditional
buffer stock of safer liquid assets but were more likely to have opened stock market
accounts. Many of these families when experiencing subsequent mortgage payment
difficulties are shown to have been more likely to exit the stock market. Mortgage difficulties
also inhibited families from becoming new stock market participants. In this way stocks seem …
As of 2007, many households had taken on very substantial commitments to housing and companion mortgage payments. At the same time they held little in the way of a traditional buffer stock of safer liquid assets but were more likely to have opened stock market accounts. Many of these families when experiencing subsequent mortgage payment difficulties are shown to have been more likely to exit the stock market. Mortgage difficulties also inhibited families from becoming new stock market participants. In this way stocks seem to have likely experienced some direct and indirect “collateral damage” from the housing market, 2007–9.
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