Consumer attitudes, expectations, and financial market participation

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School of Business | Master's thesis
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PURPOSE OF THE STUDY The purpose of this study is to investigate the determinants of financial market participation. Financial market participation will be reasearched in a very broad context including stock market participation, savings, loans and credit, credit card usage/ownership, and insurance coverage. The drivers tested in this thesis include risk tolerance, optimism, expectations, safety net expectations, sensation seeking tendency, social capital, sociability and political preference. Furthermore, I research the impact of open-mindedness which has not priorly been investigated in this context. DATA The data used is from a comprehensive survey, the RISC Monitor 2009, conducted by TNS Finland during the first quarter of 2009. The final sample size is within the range of 3,400 to 5,000 respondents. RESULTS Various attitude and expectations-related determinants are found to have an impact on financial market participation. Especially interesting are the positive impact of social capital, risk tolerance and right-wing political orientation on stock market participation. On the other hand, a big contribution is the result indicating that positive safety net expectations lead to decreased stock ownership. There is no indication of sensation seeking, optimism or sociability having any influence on participation. Safety net expectations have a negative impact on savings while right-wing political orientation has a slight positive influence. Positive expectations are however found to have a positive impact on housing loans. Optimism and sensation seeking both have a positive effect on all types of loans. Risk tolerance and sensation seeking are found to lead to increased usage or ownership of credit cards while positive safety net expectations have a slight negative effect, contrary to what was hypothesized. Insurance coverage is decreased with risk tolerance and positive safety net expectations.
stock market participation; financial market participation; savings; loans and credit; credit cards; insurance coverage: risk tolerance; optimism; expectations; safety net expectations; sensation seeking tendency; social capital; sociability; political pr
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