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Uncertainty avoidance, loss aversion and stock market participation

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  • Rieger, Marc Oliver

Abstract

Stock market participation differs a lot across countries. Cultural dimensions could be a potential factor for that. We show that indeed uncertainty avoidance (UAI) is linked to rates of stock market participation across countries. We can show even more that uncertainty avoidance has an indirect effect through loss aversion on stock market participation. The country level effects are confirmed on the individual level using data from a recent large-scale international survey, but on individual level there is also a strong effect of UAI on stock market participation after controlling for loss aversion. These results are robust after controlling for ambiguity aversion, and economic and demographic variables. Finally, we find that UAI is related to negative attitudes about stock markets in general.

Suggested Citation

  • Rieger, Marc Oliver, 2022. "Uncertainty avoidance, loss aversion and stock market participation," Global Finance Journal, Elsevier, vol. 53(C).
    • Handle: RePEc:eee:glofin:v:53:y:2022:i:c:s1044028320302982
    DOI: 10.1016/j.gfj.2020.100598
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    Cited by:

    1. Giannikos, Christos I. & Kakolyris, Andreas & Suen, Tin Shan, 2023. "Prospect theory and a manager's decision to trade a blind principal bid basket," Global Finance Journal, Elsevier, vol. 55(C).
    2. Jingjing Ye & Lulu Zhao, 2025. "Do Traditional Family Values Affect Household Asset Allocation? — Empirical from China," Journal of Family and Economic Issues, Springer, vol. 46(1), pages 277-296, March.
    3. Schaewitz, Johannes & Wang, Mei & Rieger, Marc Oliver, 2022. "Culture and Institutions: Long-lasting effects of communism on risk and time preferences of individuals in Europe," Journal of Economic Behavior & Organization, Elsevier, vol. 202(C), pages 785-829.

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