Abstract

This research study hypothesizes that lack of financial literacy, irregular and insufficient income, high transportation cost and excessive social capital (financial access) constraints the efficiency of a household's portfolio. Various geometric representation of portfolio theory exhibits the impact financial access has upon the optimal portfolio. Especially, in the case of low-income households, along with the financial access constraints there exists other exogenous factor that makes their portfolio risky. Thus there is a stronger need to provide a secure portfolio that can battle the variance in income and unforeseen circumstances. Via empirical analysis of financial diaries of households in South Africa, we find that education level; belonging to male gender and transportation cost have significant impacts on the household's portfolio allocation.

Advisor

Warner, James

Second Advisor

Pasteur, R. Drew

Department

Mathematics; Economics

Disciplines

Applied Mathematics

Publication Date

2011

Degree Granted

Bachelor of Arts

Document Type

Senior Independent Study Thesis

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© Copyright 2011 Prachi Saraogi