Financial Literacy is associated with Stock Market Expectations but not with Forecast Accuracy: Evidence from Germany

René Buschong

EconStor Preprints from ZBW - Leibniz Information Centre for Economics

Abstract: Using a representative panel dataset, this study focuses on stock market expectations as well as the accuracy of forecasts made by private households in Germany. First, I find evidence that higher financial literacy is associated with lower stock market expectations. However, there is no evidence that financial literacy is associated with the accuracy of forecasts. Second, the findings suggest that individuals form their expectations based on past performance: The three-month stock market return prior to being surveyed is associated with stated expectations and this association is heterogenous by financial literacy levels.

Keywords: financial literacy; stock market expectations; forecast error; stock market participation (search for similar items in EconPapers)
JEL-codes: G41 G51 G53 (search for similar items in EconPapers)
Date: 2022
New Economics Papers: this item is included in nep-fle and nep-fmk
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:esprep:266404

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