IMMIGRANT HOUSEHOLD INVESTMENT BEHAVIOR AND COUNTRY OF ORIGIN.pdf

INTERNATIONAL JOURNAL OF FINANCE ECONOMICS Int. J. Fin. Econ. (2012) Published online in Wiley Online Library (). DOI: 10.1002/ijfe.464 IMMIGRANT HOUSEHOLD INVESTMENT BEHAVIOR AND COUNTRY OF ORIGIN: A STUDY OF IMMIGRANTS TO THE UNITED STATES SAYAKO SETOa and VICKI L. BOGANb, *,† aCornell University, Ithaca, NY 14853 bThe Charles H. Dyson School of Applied Economics and Management, Cornell University, 320 Warren Hall, Ithaca, NY 14853 ABSTRACT Previous literature concerning immigrant financial market participation has typically treated the immigrant population as a homogeneous collective. However, the immigrant population in the United States is incredibly diverse, particularly in regards to country of origin. Using panel data, we test the hypothesis that differing information costs generate differences in U.S. immigrant asset market participation rates. We find significant variations (by country of origin) in the immigrant rates of holding stock, mutual funds, U.S. Savings Bonds, and other fixed income securities do exist. Our results provide support for the theory that information costs drive these differences. (JEL: G11)Keywords: Household investment decision making; immigrants ©2010. All rights reserved. Work in progress. All errors are our own. Copyright © 2012 John Wiley Sons, Ltd. Received 29 October 2010; Revised 26 October 2011; Accepted 5 November 2011 KEY WORDS: Household investment decisions; Immigrants; Asset market participation; Stock holding; Bond holding 1. INTRODUCTION [America is] not a “melting pot” that dissolves all differencesWith each wave of immigrants, we have become not only more diverse - but also more open...Albert Gore, Jr., 45th Vice President