DETERMINANTS OF HOUSEHOLD SAVING AND PORTFOLIO CHOICE BEHAVIOUR IN TURKEY

This study investigates the determinants of Turkish households' saving and portfolio choice behaviour for the period of 2002-2006. The dataset includes 59,855 households, of whom only 10,829 report to have saved and invested. Hence, we first estimate a logit model to identify the characteristics of the households that have saved. Next, we estimate a multinomial logit model where the investment alternatives for the households are real estate, gold, foreign exchange, bank accounts, capital market investments, and investing into own business. The factors affecting the portfolio choices are the variables representing various aspects of households' demographic, socioeconomic and residential location characteristics. The inflation level nearly doubled during the study period in Turkey. Hence, we also analyse the effects of inflation on households' saving and portfolio choice decisions. The results of our logit model support the view that the inflation can increase the household savings on condition that the other macroeconomic factors are constant. Furthermore, inflation is also found to increase the probability of investing in capital market instruments. Households' incomes, education levels, occupation, place of residence (rural/urban), car ownership and household size are found to be significant variables in explaining the variation in households' saving and portfolio choice behaviour.