What drives stock market participation? The role of institutional, traditional, and behavioral factors

Markku Kaustia, Andrew Conlin and Niilo Luotonen

Journal of Banking & Finance, 2023, vol. 148, issue C

Abstract: We analyze stock market participation in 19 European countries, providing a composite view of the interplay and relative importance of established participation drivers. We jointly control for nearly all relevant drivers found in prior studies, which tend to introduce one novel variable at a time and often omit risk-aversion. Excellent full model predictive power decomposes into institutional (country) fixed effects (about 30% of total), traditional individual-level variables (50%), and more recently identified behavioral variables (20%). We sketch a hierarchical framework where factors’ effects vary by agents’ proneness to participate. We also challenge and complement existing interpretations given to sociability, IQ, trust, and life experiences.

Keywords: Household finance; Stock market participation; Investor behavior; Financial decision-making (search for similar items in EconPapers)
JEL-codes: G15 G4 G5 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0378426622003235
Full text for ScienceDirect subscribers only

Related works:
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:eee:jbfina:v:148:y:2023:i:c:s0378426622003235

DOI: 10.1016/j.jbankfin.2022.106743

Access Statistics for this article

Journal of Banking & Finance is currently edited by Ike Mathur

More articles in Journal of Banking & Finance from Elsevier
Bibliographic data for series maintained by Catherine Liu ().