Elucidating the Invisible: Financial Assets in the Real Asset Dominated Wealth-holdings of Indian Households (1991-2013)

Abstract

Indian households, even in urban areas, show an aversion to financial assets, such as shares, debentures, deposits, insurance, and others, in favor of real assets, including land, buildings, and bullion. This paper assesses factors that influence Indian households to hold financial assets. Using repeated cross-sectional data from the latest three rounds of the National Sample Survey Organization’s Debt and Investment survey, we use logistic regression to investigate the household’s choice to hold financial assets. The study finds that households with higher proportions of wealth invested in land and buildings
are less likely to own financial assets, while households with more wealth in gold and ornaments, more education, salary earners in the family, and higher than average land prices have a greater tendency to hold financial assets. The results of the study can be helpful in understanding the relationship between financial asset and physical asset holdings in Indian context.