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March 18, 2026The Korean Journal of Community Living Science0 citations

Determinamts of Household Diversification Behavior: A Focus on Financial, Socio-Demographic, and Psychological Factors

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HLHyun-Jin LeeJPJoo-Yung ParkJKJung-Hyun Kim

Key Points

  • The aim is to examine how financial, sociodemographic, and psychological factors influence portfolio diversification levels among Korean consumers.
  • Classified consumers using the Herfindahl-Hirschman Index (HHI) into high, moderate, and low diversification groups.
  • Analyzed differences in financial and sociodemographic characteristics among consumer groups based on HHI.
  • Explored the relationship between risk tolerance, subjective fund literacy, and investment diversification.
  • High diversification group: 19%, moderate diversification: 34.6%, high concentration: 46.5%.
  • Significant differences in characteristics among groups (p < 0.001).
  • Increased risk tolerance correlates with higher likelihood of diversified investments.
  • Subjective fund literacy significantly increases probability of being in the highly diversified group.

Abstract

This study investigated the level of portfolio diversification among Korean financial consumers and examined how financial, sociodemographic, and psychological factors differ by diversification level. Using the Herfindahl-Hirschman Index (HHI), financial consumers were classified into three groups: high diversification (19%), moderate diversification (34.6%), and high concentration (46.5%). The findings revealed significant differences in financial, sociodemographic, and psychological characteristics among consumer groups classified by HHI levels (p < 0.001). As risk tolerance increased, the likelihood of holding highly diversified investments also increased. In addition, subjective fund literacy was identified as a significant factor increasing the probability of belonging to the highly diversified investment group.

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Cite This Study

Lee et al. (2026) studied this question.

synapsesocial.com/papers/69ba41e04e9516ffd37a1cd3https://doi.org/10.7856/kjcls.2026.37.1.95
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