Can Risk Be Shared across Investor Cohorts? Evidence from a Popular Savings Product release_bvka66jwbfgsjfr6o5cawzhvpa

by Johan Hombert, Victor Lyonnet

Published in The Review of financial studies by Oxford University Press (OUP).



<jats:title>Abstract</jats:title> We study how retail savings products can share market risk across investor cohorts, thereby completing financial markets. Financial intermediaries smooth returns by varying reserves, which are passed on between successive investor cohorts, thereby redistributing wealth across cohorts. Using data on euro contracts sold by life insurers in France, we estimate this redistribution to be large: 0.8% of GDP. We develop and provide evidence for a model in which low investor sophistication, while leading to individually suboptimal decisions, improves risk sharing by allowing intercohort risk sharing.
In application/xml+jats format

Archived Files and Locations

application/pdf  798.9 kB
file_ldncaan32ffu5icajnyqoizcee (publisher) (webarchive)
Read Archived PDF
Preserved and Accessible
Type  article-journal
Stage   published
Date   2022-08-24
Language   en ?
Container Metadata
Not in DOAJ
In Keepers Registry
ISSN-L:  0893-9454
Work Entity
access all versions, variants, and formats of this works (eg, pre-prints)
Catalog Record
Revision: a91a1858-3b1b-4cec-b81d-9978c4950c50