Immigrant investors in financial markets: modes of financial behavior

Abstract

This study investigates the modes of financial behavior of immigrants, comparing them with native-born investors. The study developed a theoretical framework for investigating the determinants of financial behavior, combining Bourdieu’s concept of economic habitus with the theories explaining behavior of investors in financial markets. Methods of clustering analysis and multinomial logit regression model were used. The study found that an investor’s behavior mode is strongly predicted by determinants derived from cultural, economic and social capital. For low-income persons, the culture of origin shapes their financial behavior, and for high-income persons, their economic capital and affiliation to social class are more important. Over time, immigrants assimilate in their financial choices. This study contributes to research of financial behavior as well as migration research by explaining the factors that affect preferences for financial assets allocation among immigrants. Understanding migrants’ modes of financial behavior will help policymakers to facilitate accumulation of wealth by immigrants, and in this way contribute to the process of their integration.

Keywords:

• immigrant investors
• portfolio choice
• assets allocation
• risk
• diversification
• financial behaviour

JEL Classification:

• F22
• G32
• G11

Additional information

Notes on contributors

Nonna Kushnirovich

Nonna KUSHNIROVICH, PhD, is a Senior Lecturer at the Department of Economics and Management and a Head of the Economic Studies for Non-Economists at the School of Economics and Business Administration, Ruppin Academic Center (Israel). She is also a Researcher at the Institute of Immigration and Social Integration. Nonna Kushnirovich received her PhD in 1993 at the Institute of Industrial Economics of the Ukrainian Academy of Science. Nonna is an Editor in Chief of the Yearbook on Immigration in Israel. She has published several academic articles, book chapters and two edited books. In 2010 she was included in the list of 100 Outstanding Immigrant Scientists in Israel. She is a member of the editorial boards of two academic journals. Dr Nonna Kushnirovich has a substantial experience in research projects; in 2005–2015 she was a principal investigator/coordinator of 10 research projects. Her current research interests include economics of immigration, immigrant entrepreneurship and labor migration.