Why does the demand for shares fall during the crisis? The French case.

Summary The economic crisis has affected French savers, who are less inclined to take risks in their financial behavior. How can we explain these changes? Standard theory makes savers' investments depend on three fundamental determinants: current resources . expectations of asset returns and risks, but also of labor income . and finally, the agent's preferences, particularly with respect to risk. We use French data from the Pater panel conducted in 2007 and then in 2009, 2011 and 2014. We show that the downward revision of expectations regarding expected stock returns and shocks to current resources helps explain why French people's investments are less and less invested in risky assets. On the other hand, risk preferences have remained stable. However, the return to optimism among savers in 2014 was not reflected in the facts, as the number of shareholders continued to decline. A new conundrum?