Social Interaction and Stock Market Participation: Evidence from British Panel Data

29 Pages Posted: 26 Apr 2010

See all articles by Sarah Brown

Sarah Brown

University of Sheffield - Department of Economics; IZA Institute of Labor Economics

Karl Taylor

University of Sheffield - Department of Economics

Abstract

This paper uses data from the British National Child Development Study to investigate the relationship between social interaction and participation in the stock market through holding stocks and/or shares at the individual level. In accordance with the existing literature, the results reveal that a positive relationship exists between social interaction and stock market participation, when both are measured concurrently. Furthermore, this relationship prevails across a range of measures of social interaction and social capital. In addition, we make a potentially important contribution to the existing literature by exploiting the panel nature of the data in order to explore the robustness of the cross-sectional findings. We find that the positive relationship between stock market participation and social interaction prevails within a fixed effects logit framework, which controls for time invariant unobserved effects.

Keywords: social capital, social interaction, stock market participation

JEL Classification: D12, D14, D71

Suggested Citation

Brown, Sarah and Taylor, Karl B., Social Interaction and Stock Market Participation: Evidence from British Panel Data. IZA Discussion Paper No. 4886. Available at SSRN: https://ssrn.com/abstract=1595527

Sarah Brown (Contact Author)

University of Sheffield - Department of Economics

9 Mappin Street
Sheffield, S1 4DT
United Kingdom

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Karl B. Taylor

University of Sheffield - Department of Economics ( email )

9 Mappin Street
Sheffield, S1 4DT
United Kingdom

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