Afraid of the stock market

Yuree Lim () and Kyoung Tae Kim ()
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Yuree Lim: University of Wisconsin-La Crosse
Kyoung Tae Kim: University of Alabama

Review of Quantitative Finance and Accounting, 2019, vol. 53, issue 3, No 6, 773-810

Abstract: Abstract This study demonstrates the way investors psychological traits influence their financial behaviors in the stock market. Results from the Health and Retirement Study show that anxious individuals are reluctant to participate in the stock market and have a lower level of risky investments. Anxiety’s effect is more pronounced for less educated investors, implying that anxiety about the unknown stock market drives this effect. Analysis of individual traumatic experiences as instruments for the current anxiety level suggests a causal effect of anxiety on investment decisions.

Keywords: Anxiety; Stock market participation; Investment decision; Asset allocation (search for similar items in EconPapers)
JEL-codes: D12 D14 G30 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s11156-018-0766-x

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