Unveiling investors' substitution behavior: Stock trading decisions in response to housing market dynamics

Yiqing Lü, Bin Zhao and Ning Zhu

Journal of Corporate Finance, 2024, vol. 86, issue C

Abstract: Utilizing positive quasi-random shocks to local housing prices in Shanghai, we show that stock investors who experienced significant returns from the real estate market traded less actively, took less risk, and spent less effort trading. We confirm the effect of housing price changes on investors' trading behavior in a national sample. Our findings suggest a substitution effect between the real estate and stock market and highlight the importance of understanding investors' trading behavior in light of intertemporal variations in other asset market.

Keywords: Housing price changes; Stock trading; Individual investors; Substitution effect (search for similar items in EconPapers)
JEL-codes: D15 G11 G41 G51 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:86:y:2024:i:c:s092911992400052x

DOI: 10.1016/j.jcorpfin.2024.102590

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