Determinamts of Household Diversification Behavior: A Focus on Financial, Socio-Demographic, and Psychological Factors

This study investigated the level of portfolio diversification among Korean financial consumers and examined how financial, sociodemographic, and psychological factors differ by diversification level. Using the Herfindahl-Hirschman Index (HHI), financial consumers were classified into three groups: high diversification (19%), moderate diversification (34.6%), and high concentration (46.5%). The findings revealed significant differences in financial, sociodemographic, and psychological characteristics among consumer groups classified by HHI levels (p < 0.001). As risk tolerance increased, the likelihood of holding highly diversified investments also increased. In addition, subjective fund literacy was identified as a significant factor increasing the probability of belonging to the highly diversified investment group.