Stockholding: Participation, Location, and Spillovers
Centre for Studies in Economics and Finance (CSEF), University of Naples Federico II; Center for Financial Studies (CFS); ARC Centre of Excellence in Population Ageing Research (CEPAR); Netspar
Deutsche Bundesbank - Economic Research Centre; University of Leicester; Center for Financial Studies (CFS)
Goethe University Frankfurt - House of Finance; Goethe University Frankfurt - Faculty of Economics and Business Administration; CEPR; NETSPAR
October 18, 2010
Journal of Banking and Finance, Forthcoming
This paper provides the first joint analysis of household stockholding participation, location among stockholding modes, and participation spillovers. Our model matches observed participation, conditional and unconditional, and asset location patterns. We find that financial sophistication correlates strongly only with direct stockholding and mutual fund participation, while social interactions mainly influence stockholding through retirement accounts. Whether retirement account owners include stocks in their accounts strongly depends on owner characteristics, which is not the case with mutual fund owners and investment in stock funds. Stockholding is more common among retirement account owners, but mainly because of owner characteristics rather than of any participation spillovers from retirement account ownership.
Keywords: Stockholding, Asset Location, Retirement Accounts, Household Finance, Multivariate Probit, Simulated Maximum Likelihood
JEL Classification: G11, E21
Date posted: December 16, 2010
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