EconPapers    
Economics at your fingertips  
 

Trusting the Stock Market

Luigi Guiso, Paola Sapienza and Luigi Zingales

Journal of Finance, 2008, vol. 63, issue 6, 2557-2600

Abstract: We study the effect that a general lack of trust can have on stock market participation. In deciding whether to buy stocks, investors factor in the risk of being cheated. The perception of this risk is a function of the objective characteristics of the stocks and the subjective characteristics of the investor. Less trusting individuals are less likely to buy stock and, conditional on buying stock, they will buy less. In Dutch and Italian micro data, as well as in cross‐country data, we find evidence consistent with lack of trust being an important factor in explaining the limited participation puzzle.

Date: 2008
References: Add references at CitEc
Citations: View citations in EconPapers (934)

Downloads: (external link)
https://doi.org/10.1111/j.1540-6261.2008.01408.x

Related works:
Working Paper: Trusting the Stock Market (2005) Downloads
Working Paper: Trusting the Stock Market (2005) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:jfinan:v:63:y:2008:i:6:p:2557-2600

Ordering information: This journal article can be ordered from
http://www.afajof.org/membership/join.asp

Access Statistics for this article

More articles in Journal of Finance from American Finance Association Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().

 
Page updated 2025-03-31
Handle: RePEc:bla:jfinan:v:63:y:2008:i:6:p:2557-2600