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Financial Advice and Stock Market Participation

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Author Info

  • Dimitris Georgarakos

    ()

  • Roman Inderst

    ()

Abstract

We introduce professional financial advice in households? choice to hold risky financial assets. Consistent with the predictions from a formal model, we present evidence that households? trust in financial advice only matters when their perceived own financial capability is low. Instead, for households with higher financial capability, only the perception of legal protection in financial markets matters for stock market participation. Our empirical analysis highlights economically significant differences in households? perception of their rights as consumers of financial services, even when their objective circumstances should not be much different.

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File URL: http://www.bcl.lu/fr/publications/cahiers_etudes/51/BCLWP051.pdf
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Bibliographic Info

Paper provided by Central Bank of Luxembourg in its series BCL working papers with number 51.

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Length: 46 pages
Date of creation: Feb 2011
Date of revision:
Handle: RePEc:bcl:bclwop:bclwp051

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Web page: http://www.bcl.lu/

Related research

Keywords: Financial Advice; Trust; Consumer Protection; Household Finance;

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References

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Citations

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Cited by:
  1. Luigi Guiso & Paolo Sodini, 2012. "Household Finance. An Emerging Field," EIEF Working Papers Series 1204, Einaudi Institute for Economics and Finance (EIEF), revised Mar 2012.
  2. Salvatore Piccolo & Giovanni W. Puopolo & Luis Vasconcelos, 2013. "Non-Exclusive Financial Advice," CSEF Working Papers 347, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
  3. Nicola Gennaioli & Andrei Shleifer & Robert Vishny, 2012. "Money Doctors," Working Papers 464, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
  4. M. Fort & F. Manaresi & S. Trucchi, 2012. "Banks Information Policies, Financial Literacy and Household Wealth," Working Papers wp852, Dipartimento Scienze Economiche, Universita' di Bologna.

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