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Distrust in Finance Lingers: Jewish Persecution and Households' Investments

Marcel Prokopczuk (), Francesco D'Acunto and Michael Weber ()
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Francesco D'Acunto: University of California at Berkeley

No 26, 2015 Meeting Papers from Society for Economic Dynamics

Abstract: We look at the geography of historical Jewish persecution to proxy for localized distrust in finance. Households in German counties where Jewish persecution was one standard deviation higher are 7.5% to 12% less likely to invest in stocks. The results hold when comparing only geographically close counties, and counties that hosted documented Jewish communities in the distant past. Current antisemitism, discriminatory beliefs, generalized trust, or supply-side forces do not explain the effect, which instead is consistent with a norm of distrust in finance, transmitted across generations. The forced migrations of Jewish communities across the German lands in the Middle Ages help assess if the effect of Jewish persecution on stockholdings is causal.

Date: 2015
New Economics Papers: this item is included in nep-his
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