Do the Rich Get Richer in the Stock Market? Evidence from India / John Y. Campbell, Tarun Ramadorai, Benjamin Ranish.

Format:

Book

Author/Creator:

Campbell, John Y.

Contributor:

National Bureau of Economic Research.

Ramadorai, Tarun.

Ranish, Benjamin.

Series:

Working Paper Series (National Bureau of Economic Research) no. w24898.

NBER working paper series no. w24898

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2018.

Summary:

We use data on Indian stock portfolios to show that return heterogeneity is the primary contributor to increasing inequality of wealth held in risky assets by Indian individual investors. Return heterogeneity increases equity wealth inequality through two main channels, both of which are related to the prevalence of undiversified accounts that own relatively few stocks. First, some undiversified portfolios randomly do well, while others randomly do poorly. Second, larger accounts diversify more effectively and thereby earn higher average log returns even though their average simple returns are no higher than those of smaller accounts.

Notes:

Print version record

August 2018.