Stock market participation and household characteristics in Europe

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dc.contributor Aalto University en
dc.contributor Aalto-yliopisto fi Laakso, Elina 2011-11-14T11:23:37Z 2011-11-14T11:23:37Z 2010
dc.description.abstract PURPOSE OF THE STUDY The purpose of this study is to shed more light to limited stock market participation which has been found to have many implications on both household level and public at large. To reach this goal, I analyze a comprehensive list of stock market participation drivers and compare their explanatory power. Even though limited stock market participation is widely studied in the field of household finance, this is the first paper to comprehensively summarize a range of household characteristics associated with stock market participation and to test the robustness of these characteristics in explaining stock market participation, controlling for all relevant demographic variables. This study focuses both on the established drivers of stock ownership, that is, wealth, risk aversion and education, and on the more recently studied drivers of stock ownership, that is, social interaction, trust, personal values, cognitive skills and health. In addition, this study introduces two new stock market participation drivers to household finance, that is, life satisfaction and conservatism, and is the first to analyze the direct effect of religiousness on the probability of holding stocks. DATA This study employs data from the cross-European Survey on Health, Ageing and Retirement in Europe (SHARE), which includes a comprehensive set of questions related to various aspects of life as well as information on the respondents’ financial wealth. The second wave of SHARE used in this paper includes in total 34,415 respondents and covers fourteen European countries. RESULTS I find that, in addition to demographic variables and risk aversion, sociability, personal values, cognitive skills, health, life satisfaction and religion play a statistically significant role in stock market participation. Risk aversion stands out as the single most economically significant driver of stock market participation, and furthermore, all characteristics included in this study seem to explain the level of individual risk aversion. After risk aversion and demographic variables, sociability and political orientation have the most explanatory power in the probability of holding stocks. Surprisingly, trust has an insignificant effect on stockholding throughout the study. Cognitively able persons are more likely to participate in the stock market but none of the individual skills, numerical skills, recall ability and verbal fluency, stand out from the rest. Life satisfaction increases the likelihood of holding stocks, whereas poor health, religiousness and conservatism have an adverse effect on stock market participation. en
dc.format.extent 96
dc.format.mimetype application/pdf en
dc.language.iso en en
dc.title Stock market participation and household characteristics in Europe en
dc.type G2 Pro gradu, diplomityö fi Kauppakorkeakoulu fi School of Economics en
dc.contributor.department Department of Accounting and Finance en
dc.contributor.department Laskentatoimen ja rahoituksen laitos fi
dc.subject.keyword stock market participation
dc.subject.keyword risk aversion
dc.subject.keyword sociability
dc.subject.keyword political orientation
dc.subject.keyword interpersonal trust
dc.subject.keyword cognitive skills
dc.subject.keyword health
dc.subject.keyword life satisfaction
dc.subject.keyword religiousness
dc.identifier.urn URN:NBN:fi:aalto-201111181429
dc.type.dcmitype text en
dc.programme.major Finance en
dc.programme.major Rahoitus fi
dc.type.ontasot Master's thesis en
dc.type.ontasot Pro gradu tutkielma fi
dc.subject.helecon rahoitus
dc.subject.helecon financing
dc.subject.helecon osakemarkkinat
dc.subject.helecon stock markets
dc.subject.helecon kotitaloudet
dc.subject.helecon households
dc.subject.helecon Eurooppa
dc.subject.helecon Europe
dc.ethesisid 12385 2010-09-08
dc.location P1 I

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