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Social Interaction and Stock Market Participation: Evidence from British Panel Data

Listed author(s):
  • Sarah Brown

    ()

    (Department of Economics, The University of Sheffield Author-Person=pbr160)

  • Karl Taylor

    ()

    (Department of Economics, The University of Sheffield Author-Person=pta44)

This paper uses data from the British National Child Development Study to investigate the relationship between social interaction and participation in the stock market through holding stocks and/or shares at the individual level. In accordance with the existing literature, the results reveal that a positive relationship exists between social interaction and stock market participation, when both are measured concurrently. Furthermore, this relationship prevails across a range of measures of social interaction and social capital. In addition, we make a potentially important contribution to the existing literature by exploiting the panel nature of the data in order to explore the robustness of the cross-sectional findings. We find that the positive relationship between stock market participation and social interaction prevails within a fixed effects logit framework, which controls for time invariant unobserved effects.

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File URL: http://www.shef.ac.uk/economics/research/serps/articles/2010_008.html
File Function: First version, 2010
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Paper provided by The University of Sheffield, Department of Economics in its series Working Papers with number 2010008.

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Length: 28 pages
Date of creation: Apr 2010
Date of revision: Apr 2010
Handle: RePEc:shf:wpaper:2010008
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