Individualism and stock market participation

Yang Zhou, Weijie Lu, Geng Niu and Ziqiong Xi

The European Journal of Finance, 2025, vol. 31, issue 3, 289-317

Abstract: This paper investigates the relation between a cultural orientation toward individualism and household stock market participation. We adopt an epidemiological approach to establish causality. Employing large samples of second-generation immigrants in the U.S. and Europe, we focus on how the cultural heritage of individuals from different origins influences their engagement in stock market participation. To verify this relationship, we utilize data from the the Current Population Survey (CPS) and the Survey of Health, Ageing and Retirement in Europe (SHARE). Our findings reveal that immigrants from countries with a stronger individualistic cultural orientation are more likely to participate in the stock market. Furthermore, by leveraging data from the U.S. Census and American Community Survey (ACS), we demonstrate that the positive effect of individualistic cultural heritage is amplified for immigrants whose parents have made significant cultural investments. Additionally, utilizing data from the General Social Survey (GSS) to identify cultural mechanisms, we uncover that individualism culture shapes immigrants’ beliefs by fostering trust and optimism. Overall, our empirical evidence underscores the profound and persistent of culture on household stock market participation.

Date: 2025
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DOI: 10.1080/1351847X.2024.2380409

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