Trust, Sociability and Stock Market Participation

50 Pages Posted: 2 May 2009 Last revised: 2 May 2012

See all articles by Dimitris Georgarakos

Dimitris Georgarakos

European Central Bank (ECB) - Directorate General Research; Center for Financial Studies (CFS)

Giacomo Pasini

Ca' Foscari University of Venice; Netspar

Multiple version iconThere are 3 versions of this paper

Date Written: August 1, 2011


This paper 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.

Keywords: Trust, sociability, household finance, stockholding

JEL Classification: A13, D12, D8, G11

Suggested Citation

Georgarakos, Dimitris and Pasini, Giacomo, Trust, Sociability and Stock Market Participation (August 1, 2011). Available at SSRN: or

Dimitris Georgarakos (Contact Author)

European Central Bank (ECB) - Directorate General Research ( email )

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Frankfurt am Main, 60314

Center for Financial Studies (CFS) ( email )

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Giacomo Pasini

Ca' Foscari University of Venice ( email )

Cannaregio 873
Venice, 30121
+39 041 234 9171 (Phone)
+39 041 2349176 (Fax)

HOME PAGE: http://

Netspar ( email )

P.O. Box 90153
Tilburg, 5000 LE


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