Social Engagement and Stock Market Participation
Review of Finance, Forthcoming
68 Pages Posted: 28 Aug 2012 Last revised: 6 Feb 2014
Date Written: January 31, 2014
We investigate the separate and joint influences of social engagement measures on stock market participation and find that socially engaged individuals are more likely to participate. Consistent with Granovetter’s (1973) theory of social networks we find that a weak tie (measured by social group involvement) has a positive effect on stock market participation whereas a strong tie (measured by frequency of talking to neighbours) has no effect. More trusting individuals are more likely to participate in the stock market, as are those who identify with a political party. In contrast, the degree to which religion is important appears to have little impact.
Keywords: Stock Market Participation, Social Engagement, Household Finance
JEL Classification: A13, D12, D72, G11, Z12
Suggested Citation: Suggested Citation