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Housing market investability and stock market participation

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Listed:
  • Gao, Huasheng
  • Lü, Yiqing
  • Zhao, Bin
  • Zhu, Ning

Abstract

We identify a causal crowding-out effect of housing market investment on stock market participation. Using a large sample of individual stock trading data and exploiting China's policy on restricting households from purchasing houses, we find a significant increase in the stock market participation among affected households compared to others. Our results are driven by the substitution channel between the housing and stock market: (1) the treatment policy indeed reduces households’ investment in housing, (2) the treatment effect is more pronounced with stricter housing purchase restrictions and higher propensity for real property investment, and (3) households’ stock turnover rate decreases.

Suggested Citation

  • Gao, Huasheng & Lü, Yiqing & Zhao, Bin & Zhu, Ning, 2025. "Housing market investability and stock market participation," Economics Letters, Elsevier, vol. 248(C).
    • Handle: RePEc:eee:ecolet:v:248:y:2025:i:c:s0165176525000564
    DOI: 10.1016/j.econlet.2025.112219
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    References listed on IDEAS

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    More about this item

    Keywords

    Stock market participation; Housing market; Household finance; Stock trading;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R28 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Government Policy

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