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Who owns stocks in England: A panel analysis

Ashok Thomas and Luca Spataro

Discussion Papers from Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy

Abstract: We analyse the determinants of the decision to enter the stock market in England through a panel analysis on data drawn from the English Longitudinal Survey of Ageing dataset, for years 2002-2012. For doing this we use several methodologies including a probit model controlling for both unobserved heterogeneity and serial correlation through Correlated Random Effects, Generalized Estimating Equations and Generalized Linear Models. Additionally, the endogeneity of financial literacy is controlled for by using the Control Function approach. Financial literacy is found to be a significant determinant of the decision to enter the stock market, with an average partial effect of 5.8%. The education quality (proxied by student-teacher ratios) and the financial incentives observed at early ages (captured by the sharpe-ratios observed by individuals at early adult life) play a significant role as well. As for individual variables, both financial resources and social interaction attitude affect positively the probability to join the stock market.

Keywords: stock market participation; financial literacy; panel analysis. (search for similar items in EconPapers)
Date: 2016-01-01
New Economics Papers: this item is included in nep-fle
Note: ISSN 2039-1854
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