Financial Advice and Stock Market Participation

Roman Inderst and Dimitris Georgarakos

No 9922, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We introduce professional financial advice in households? choice to hold risky financial assets. Consistent with the predictions from a formal model, we present evidence that households? trust in financial advice only matters when their perceived own financial capability is low. Instead, for households with higher financial capability, only the perception of legal protection in financial markets matters for stock market participation. Our empirical analysis highlights economically significant differences in households? perception of their rights as consumers of financial services, even when their objective circumstances should not be much different.

Keywords: Financial advice; Household finance; Trust; Consumer protection (search for similar items in EconPapers)
JEL-codes: D8 E1 G2 (search for similar items in EconPapers)
Date: 2014-04
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Citations: View citations in EconPapers (37)

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Related works:
Working Paper: Financial Advice and Stock Market Participation (2011)
Working Paper: Financial advice and stock market participation (2011)
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