Research

In and down: The native-immigrant gap in portfolio diversification [SSRN]

PhD Nordic Finance Workshop 2024, BFWG 2024, RBFC 2024

Abstract: This paper examines the presence of a portfolio diversification gap between immigrants and natives. By exploiting a comprehensive administrative dataset from Sweden, encompassing 288,062 randomly selected individual investors, the study reveals that immigrants undertake up to 37% more return loss than the natives due to suboptimal portfolio diversification. I find no evidence indicating that a longer duration of stay mitigates the loss gap. However, the gap could be attributed to the extent of immigrants’ integration into society and their financial literacy measured at the country-of-origin level. The gap even seems to remain substantial among second-generation immigrants whose parents were both born abroad. The findings imply that immigrants may benefit from policies that facilitate social integration and promote financial education.

Hou, A.J., Jonsson, S., Li, X. and Ouyang, Q. (2025) From employee to entrepreneur: the role of unemployment risk. Journal of Financial Economics, 163. [Link]

Jonsson, S. and Ouyang, Q. (2023) Effects of cultural origin on entrepreneurship. Journal of Economic Behaviour & Organization, 216, 308-319. [Link]

Investors herding in the stock market

with Ai Jun Hou and Sara Jonsson