NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
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Do the Rich Get Richer in the Stock Market? Evidence from India

John Y. Campbell, Tarun Ramadorai, Benjamin Ranish

NBER Working Paper No. 24898
Issued in August 2018
NBER Program(s):Asset Pricing

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.

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Document Object Identifier (DOI): 10.3386/w24898

Published: John Y. Campbell & Tarun Ramadorai & Benjamin Ranish, 2019. "Do the Rich Get Richer in the Stock Market? Evidence from India," American Economic Review: Insights, vol 1(2), pages 225-240. citation courtesy of

 
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