Rethinking the Stock Market Participation Puzzle: A Qualitative Approach

Kamila Duraj, Daniela Grunow, Michael Haliassos, Christine Laudenbach and Stephan Siegel

No 11980, CESifo Working Paper Series from CESifo

Abstract: We revisit the puzzle of limited stock market participation using qualitative methods common in other social sciences but rare in economics. Through in-depth interviews with investors and non-investors in Germany—a high-income country with low market participation—we elicit open-ended reflections on money without mentioning investing upfront. This allows beliefs and barriers to emerge naturally. We analyze these interviews using traditional human-led content analysis, complemented with a large language model (LLM)-based approach. We validate our findings using a representative survey of more than 7,000 individuals. While many known factors appear, we uncover a pervasive misconception: participation is believed to require selecting “safe” stocks, avoiding “bad” ones, and timing the market through monitoring and frequent trading. This inflates perceived costs and deters participation. Some investors overcome these barriers with support from family, friends, or trusted advisors. Notably, even active investors hold these beliefs, suggesting the misconception influences both entry and behavior in the market.

Keywords: stock market participation; qualitative research (search for similar items in EconPapers)
JEL-codes: G40 G50 G51 G53 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_11980

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