Title: How Negative Interest Rates Affect the Risk-Taking of Individual Investors: Experimental Evidence
Abstract: Since the financial crisis of 2008, risk-free interest rates are at historical lows and even turned negative in some developed countries. We study experimentally how such changes in the interest rate regime affect the risk-taking of individual investors. Keeping the risk premium constant, we find that a reduction in the interest rate does not affect risk-taking in general. Risk-taking only increases significantly if the interest rate falls below zero. These findings are in line with value functions that are highly return sensitive around zero.
Publication Year: 2018
Publication Date: 2018-01-01
Language: en
Type: article
Indexed In: ['crossref']
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