Investor structure and stock market fluctuations: a quantitative analysis

Yiyao He, Shaoyun Liu and Haiwei Jiang

Applied Economics Letters, 2025, vol. 32, issue 7, 1029-1033

Abstract: This paper investigates the relationship between the investor structure and stock price by introducing heterogeneous traders into a standard DSGE model. This paper finds that the stock market experiences intense stock price fluctuations due to a high proportion of individual speculators. Our simulations indicate that the optimal proportion of individual speculators in China’s stock market is about 43% to maximize social welfare.

Date: 2025
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DOI: 10.1080/13504851.2023.2300958

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