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Stock market literacy, trust, and participation

Balloch, A.; Nicolae, A.; Philip, D.

Stock market literacy, trust, and participation Thumbnail


A. Balloch


This article studies the importance of stock market literacy and trust for stock ownership decisions. We find that these two distinct channels simultaneously explain not only the probability of participation, but, conditional on participation, also explain the share of investment in stocks. Once we account for stock market literacy, sociability is no longer significant for participation; what matters is literacy rather than sociability. Further, we observe that economic shocks and future expectations are key behavioral characteristics that explain a household’s decision to invest in stocks. However, upon participation, a larger set of behavioral characteristics explains the level of stock investment.

Journal Article Type Article
Acceptance Date Aug 18, 2014
Online Publication Date Sep 18, 2014
Publication Date Aug 1, 2015
Deposit Date Aug 28, 2014
Publicly Available Date Sep 18, 2016
Journal Review of Finance
Print ISSN 1572-3097
Electronic ISSN 1573-692X
Publisher Oxford University Press
Peer Reviewed Peer Reviewed
Volume 19
Issue 5
Pages 1925-1963
Keywords Financial literacy, Trust, Sociability, Stock market participation, Participation cost.
Public URL


Accepted Journal Article (780 Kb)

Copyright Statement
This is a pre-copyedited, author-produced PDF of an article accepted for publication in Review of Finance following peer review. The definitive publisher-authenticated version Adnan Balloch, Anamaria Nicolae, and Dennis Philip (2015)
Stock Market Literacy, Trust, and Participation,
Review of Finance, 19 (5): 1925-1963 is available online at:

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