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

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