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Contribution Details
| Type | Journal Article |
| Scope | Discipline-based scholarship |
| Title | Inflation and Individual Investors' Behavior: Evidence from the German Hyperinflation |
| Organization Unit | |
| Authors |
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| Item Subtype | Original Work |
| Refereed | Yes |
| Status | Published in final form |
| Language |
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| Journal Title | Review of Financial Studies |
| Publisher | Oxford University Press |
| Geographical Reach | international |
| ISSN | 0893-9454 |
| Volume | 36 |
| Number | 12 |
| Page Range | 5012 - 5045 |
| Date | 2023 |
| Abstract Text | We analyze how individual investors respond to inflation. We introduce a unique dataset containing information on local inflation and security portfolios of more than 2,000 clients of a German bank between 1920 and 1924, covering the German hyperinflation. We find that individual investors buy less (sell more) stocks when facing higher local inflation. This effect is more pronounced for less sophisticated investors. Moreover, we document a positive relation between local inflation and forgone returns following stock sales. Our findings are consistent with individual investors suffering from money illusion. Alternative explanations such as consumption needs are unlikely to drive our results. |
| Free access at | DOI |
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| Digital Object Identifier | 10.1093/rfs/hhad047 |
| Other Identification Number | merlin-id:23650 |
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| Additional Information | Bereits als Working Paper in University of St.Gallen - School of Finance Research Paper erschienen: https://doi.org/10.2139/ssrn.3802488. |