Trust, sociability, and stock market participation

Georgarakos, D. and Pasini, G. (2011) Trust, sociability, and stock market participation. Review of Finance, 15(4), pp. 693-725. (doi: 10.1093/rof/rfr028)

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This article investigates the importance of both trust and sociability for stock market participation and for differences in stockholding across Europe. We estimate significant effects for the two, and find that sociability can partly balance the discouragement effect on stockholding induced by low regional prevailing trust. We test for exogeneity of trust and sociability indicators using variation in history of political institutions and in frequency of contacts with grandchildren, respectively. Moreover, the effect of trust is stronger in countries with limited participation and low average trust, offering an explanation for the remarkably low stockholding rates of the wealthy living therein.

Item Type:Articles
Glasgow Author(s) Enlighten ID:Georgarakos, Professor Dimitris
Authors: Georgarakos, D., and Pasini, G.
College/School:College of Social Sciences > Adam Smith Business School > Economics
Journal Name:Review of Finance
Publisher:Oxford University Press
ISSN (Online):573-692X

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