Trusting the Stock Market
AbstractWe study the effect that a general lack of trust can have on stock market participation. In deciding whether to buy stocks, investors factor in the risk of being cheated. The perception of this risk is a function of the objective characteristics of the stocks and the subjective characteristics of the investor. Less trusting individuals are less likely to buy stock and, conditional on buying stock, they will buy less. In Dutch and Italian micro data, as well as in cross-country data, we find evidence consistent with lack of trust being an important factor in explaining the limited participation puzzle. Copyright (c) 2008 The American Finance Association.
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Bibliographic InfoArticle provided by American Finance Association in its journal The Journal of Finance.
Volume (Year): 63 (2008)
Issue (Month): 6 (December)
Other versions of this item:
- D1 - Microeconomics - - Household Behavior
- D8 - Microeconomics - - Information, Knowledge, and Uncertainty
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Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:
- Truth or consequences: Ponzi schemes and other frauds
by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets on 2014-07-21 15:15:19
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