Trust and trading volume

Taejin Kim

Economics Letters, 2021, vol. 207, issue C

Abstract: This study theoretically investigates the influence of social trust on the trading volume in asset markets. Trust influences how an investor interprets new information supplied by other agents in the market when they decide their portfolio allocation. First, this study shows that the relationship between trust and trading volume is not monotonic. Trading volume is maximized at an intermediate level of trust and minimized at its extreme values. Moreover, the relationship between the trading volume and precision of public signals that investors may trust is not always negative.

Keywords: Social trust; Trading volume; Portfolio choice; Information precision (search for similar items in EconPapers)
JEL-codes: A14 G11 G12 G14 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:207:y:2021:i:c:s0165176521002809

DOI: 10.1016/j.econlet.2021.110003

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