Trust, Sociability, and Stock Market Participation
AbstractThis article investigates the importance of both trust and sociability for stock market participation and for differences in stockholding across Europe. We estimate significant effects for the two, and find that sociability can partly balance the discouragement effect on stockholding induced by low regional prevailing trust. We test for exogeneity of trust and sociability indicators using variation in history of political institutions and in frequency of contacts with grandchildren, respectively. Moreover, the effect of trust is stronger in countries with limited participation and low average trust, offering an explanation for the remarkably low stockholding rates of the wealthy living therein. Copyright 2011, Oxford University Press.
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Bibliographic InfoArticle provided by European Finance Association in its journal Review of Finance.
Volume (Year): 15 (2011)
Issue (Month): 4 ()
Other versions of this item:
- A13 - General Economics and Teaching - - General Economics - - - Relation of Economics to Social Values
- D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
- D8 - Microeconomics - - Information, Knowledge, and Uncertainty
- G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
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