Disentangling the Effect of Housing on Household Stock Holdings: Evidence from Japanese Micro Data

33 Pages Posted: 24 Jan 2018

See all articles by Tokuo Iwaisako

Tokuo Iwaisako

Hitotsubashi University - Institute of Economic Research

Arito Ono

Chuo University

Amane Saito

Mizuho Research Institute Ltd.

Hidenobu Tokuda

Mizuho Research Institute Ltd.

Date Written: January 24, 2018

Abstract

Using Japanese household micro survey data during 2000-2015, this paper examines the effects of housing on household stock holdings. To disentangle the effect of housing asset (land value) and mortgage debt on households’ portfolio share of stocks out of liquid financial assets, we apply the instrumental variable approach by Chetty et al. (2017) that employs differences in average land price indices across housing markets in the year in which household portfolios are measured and those in the year in which the house was purchased. Our estimates suggest that an exogenous increase in land value (holding mortgage debt constant) increases the portfolio share of stocks, while an increase in mortgage debt (holding land value constant) reduces it. We also find that an increase in land value and mortgage debt (holding home equity constant) does not affect the portfolio share of stocks, but increases the repayment of mortgage debt.

Keywords: housing, home equity, mortgage debt, portfolio choice

JEL Classification: D14, G11, R21

Suggested Citation

Iwaisako, Tokuo and Ono, Arito and Saito, Amane and Tokuda, Hidenobu, Disentangling the Effect of Housing on Household Stock Holdings: Evidence from Japanese Micro Data (January 24, 2018). Asian Finance Association (AsianFA) 2018 Conference. Available at SSRN: https://ssrn.com/abstract=3108534 or http://dx.doi.org/10.2139/ssrn.3108534

Tokuo Iwaisako (Contact Author)

Hitotsubashi University - Institute of Economic Research ( email )

2-1 Naka Kunitachi-shi
Tokyo 186-8306
Japan

Arito Ono

Chuo University ( email )

2nd floor Blg 4 Tampa Campus
742-1 Higashinakano, Hachioji
Tokyo 192-03
Japan

HOME PAGE: http://https://sites.google.com/site/aritoono/Home

Amane Saito

Mizuho Research Institute Ltd. ( email )

1-2-1 Uchisaiwaicho
Chiyoda-ku
Tokyo, 100-0011
Japan

Hidenobu Tokuda

Mizuho Research Institute Ltd. ( email )

1-2-1 Uchisaiwaicho
Chiyoda-ku
Tokyo, 100-0011
Japan

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