Neighbourhood Effects and Asset Allocation

Abstract

Previous research has shown racial/ethnic effects in asset allocation. We extend these results by showing how these effects depend on the racial composition of the neighbourhood. In particular, we show that in predominately white neighbourhoods there are significant differences in asset allocations across racial groups; however, in mixed or white minority neighbourhoods, this difference disappears. We also find that Asians, a previously understudied group, show a greater willingness to hold risky assets compared with other groups.