In this paper we employ the natural experiment of German Division and Reunification in order to study the effect of institutional reform on risky portfolio choice. We present empirical evidence indicating that 16 years after German Reunification portfolios of East and West German bank customers differed systematically. While these differences are especially pronounced for bank customers with experiences in the former communist system, even the younger generation of East Germans still differs remarkably from their West German counterparts in terms of risky asset choice. Thus, informal institutions tend to have long-lasting effects on portfolio behaviorLuik