Stock Market Literacy, Trust, and Participation
Open accessAbstract
This article studies the importance of stock market literacy and trust for stock ownership decisions. We find that these two distinct channels simultaneously explain not only the probability of participation, but, conditional on participation, also explain the share of investment in stocks. Once we account for stock market literacy, sociability is no longer significant for participation; what matters is literacy rather than sociability. Further, we observe that economic shocks and future expectations are key behavioral characteristics that explain a household’s decision to invest in stocks. However, upon participation, a larger set of behavioral characteristics explains the level of stock investment.
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Financial sophistication is positively associated with the conditional magnitude of investing in stocks for U.S. households who do hold stocks in their portfolios.
“In addition, they show a positive association between financial sophistication and the conditional magnitude of investing in stocks for those households who do hold stocks in their portfolios.”
From Financial literacy, financial advice, and financial behavior (2017) · cites this paper as Balloch et al. (2015)
Among U.S. retail investors, stock market literacy positively correlates with their likelihood of stock market participation, besides trust.
“In a related study among retail investors in the U.S., Balloch et al. (2015) find that, besides trust, stock market literacy positively correlates with their likelihood of stock market participation.”
From Financial literacy, financial advice, and financial behavior (2017) · cites this paper as Balloch et al. (2015)
Cites
Financial literacy and stock market participation
van Rooij, M., Lusardi, A., & Alessie, R. (2011) · Journal of Financial Economics · doi:10.1016/j.jfineco.2011.03.006 · Cited by 3,554 · cited 3× · see citing works
“…and Nagel, 2011), educational attainment and (cid:133)nancial sophistication (Christelis et al., 2011), (cid:133)nancial literacy (Cardak and Wilkins, 2009; Van Rooij et al., 2011), cognitive ability (Benjamin et al., 2013), and sociability (Hong et al., 2004; B(cid:246)nte and Filipiak, 2012).”
Barsky, R. B., Juster, F. T., Kimball, M. S., & Shapiro, M. D. (1997) · The Quarterly Journal of Economics · doi:10.1162/003355397555280 · Cited by 2,400 · see citing works
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Financial literacy, financial advice, and financial behavior
Stolper, O. A., & Walter, A. (2017) · Journal of Business Economics · doi:10.1007/s11573-017-0853-9 · Cited by 471 · see citing works
“Panel A lists the available surveys for Germany, Panel B contains European household surveys and Panel C (Panel D) refers to surveys conducted in the U.S. (in other countries).”
BackgroundInfluentialLee, T., Lee, B.-K., & Lee-Geiller, S. (2020) · International Journal of Information Management · doi:10.1016/j.ijinfomgt.2020.102098 · Cited by 122 · see citing works
- Authors
- Balloch, A., Nicolae, A., & Philip, D.
- Affiliations
- Durham University (GB)
- Venue
- Review of Finance
- Publisher
- Oxford University Press (OUP)
- Published
- 2014-09-18
- Volume
- 19
- Issue
- 5
- Pages
- 1925-1963
- ISSN
- 1382-6662 (ISSN-L)
- 1573-692X
- 1572-3097
- OpenAlex
- W3125330875
- Cited by
- 187
- References
- 2
- Citations by year
- 2026: 14 · 2025: 27 · 2024: 29 · 2023: 15 · 2022: 20 · 2021: 23 · 2020: 20 · 2019: 13 · 2018: 8 · 2017: 13 · 2016: 1 · 2015: 3 · 2012: 1
- FWCI
- 24.08
- Type
- journal article
- Language
- en
- Open access
- bronze
- doi.org
- Locations
- European Finance Review (publishedVersion)
- SSRN Electronic Journal (publishedVersion)
- Durham Research Online (Durham University) (acceptedVersion, other-oa)
- Durham Research Online (Durham University) (submittedVersion, cc-by)
- RePEc: Research Papers in Economics (submittedVersion)
- Funders
- Commonwealth Scholarship Commission
- Topics
- Social Sciences › Business, Management and Accounting › Accounting › Financial Literacy, Pension, Retirement Analysis
- Social Sciences › Business, Management and Accounting › Accounting › Financial Literacy and Behavior
- Social Sciences › Economics, Econometrics and Finance › Finance › Financial Markets and Investment Strategies
- Keywords
- trust, stock ownership, stock market participation, sociability, economic shocks, future expectations, behavioral characteristics, household finance
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