An Empirical Analysis of Differences in Black and White Asset and Liability Combinations
(pp. 129-147) DOWNLOAD FULL-TEXT ARTICLE
Daniel P. Salandro, Yaw A. Badu, Kenneth N. Daniels

ABSTRACT
This study analyzes data from the 1992 Survey of Consumer Finances and finds significant differences in asset and liability combinations between black and white households. In addition, white households are identified as having significantly greater net worth and financial assets relative to black households. We are unable to show that the net worth of black households is constrained by barriers in financial markets. Our study investigates how this difference in net worth could engender different financing decisions. We find that black households are significantly more risk averse in their choice of assets. Further, we find that black households typically pay higher rates for several types of credit instruments, even though they self identify as conducting significantly more extensive searches in the financial markets.

Racial Differences in Investor Decision Making (pp. 149-162) DOWNLOAD FULL-TEXT ARTICLE
Catherine P. Montalto, Michael S. Gutter, Jonathan J. Fox

ABSTRACT
Racial differences in investment behavior are investigated using data from the 1995 Survey of Consumer Finances. Socioeconomic, financial, and attitudinal variables are incorporated in a life-cycle savings model. The impact of all variables is allowed to differ between Black households and White households in order to understand racial differences in risky asset ownership. We determine that observed racial differences in risky asset ownership are explained by racial differences in the individual determinants of risky asset ownership, not by race in and of itself. Specifically, these differences appear to center on the impact of children and household size.

Financial Risk Tolerance Revisited: The Development Of A Risk Assessment Instrument
(pp. 163-181) DOWNLOAD FULL-TEXT ARTICLE
John Grable, Ph.D., CFP©, Ruth H. Lytton, Ph.D.

ABSTRACT
This paper explores conceptual, methodological, and empirical issues related to the development of a financial risk-tolerance assessment instrument. Financial risk tolerance is a significant factor in a number of household financial decisions, yet few recognized, valid, and reliable methods of assessment are available for use by financial service providers and educators. Empirical results from a multi-stage development of a 13-item risk assessment instrument are discussed. The multidimensional instrument is presented as the foundation for the development of a more widely used and accepted index. Future use by practitioners and researchers is encouraged to further validate the usefulness of the instrument.

An Analysis of Affinity Programs: The Case of Real Estate Brokerage Participation
(pp. 183-197) DOWNLOAD FULL-TEXT ARTICLE
Randy I. Anderson, Danielle Lewis, Leonard V. Zumpano

ABSTRACT
In this study we examine the impact of affinity programs on the residential real estate brokerage market. The results indicate that affinity-participating firms employ more salespeople, operate more offices, are more likely to be franchised, and have more multiple listings service affiliations than their non-participating counterparts. We directly test for firm and industry efficiency using a Bayesian stochastic frontier technique, and find strong evidence that non-affinity firms are much more efficient at allocating and utilizing their resources. These findings cast concerns on the industry in light of the growth of affinity programs.

International Mutual Fund Returns andFederal Reserve Policy
(pp. 199-210) DOWNLOAD FULL-TEXT ARTICLE
Robert R. Johnson, Ph.D., CFA, Gerald W. Buetow, Ph.D., CFA, Gerald R. Jensen, Ph.D.

ABSTRACT
This study examines the performance of international mutual fund indexes across alternative Federal Reserve monetary policy environments. The results suggest that the benefits touted by advocates of international diversification may be less than previous studies indicate. Specifically, during restrictive U.S. monetary policy periods, international mutual fund indexes provide lower excess returns than domestic counterparts. Additionally, the correlations between international mutual funds and domestic mutual funds are higher during restrictive monetary policy periods. This evidence may represent a partial explanation for the home country bias exhibited by U.S.-based individual and institutional investors.