Securities Regulation, Household Equity Ownership, and Trust in the Stock Market

69 Pages Posted: 11 Nov 2017 Last revised: 15 Jan 2019

See all articles by Hans Bonde Christensen

Hans Bonde Christensen

University of Chicago - Booth School of Business

Mark G. Maffett

University of Chicago - Booth School of Business

Lauren Vollon

University of Chicago Booth School of Business

Date Written: January 14, 2019

Abstract

Using aggregate data from national accounts, we study whether strengthening and harmonizing securities regulation across the European Union increases household equity ownership. We find a significant increase in the proportion of liquid assets invested in equity, both when a household’s own country adopts the regulation and when other countries adopt the regulation. To directly explore the mechanism through which households’ willingness to directly invest in the equity market increases, we show that the effect of securities regulation is stronger in countries where trust is low and between countries where cultural biases are most pronounced.

Keywords: National accounts, households, equity ownership, trust, securities regulation

JEL Classification: D03, G14, G18, G38, I18, J28, K22, K32, L71, L72, M41, M48

Suggested Citation

Christensen, Hans Bonde and Maffett, Mark G. and Vollon, Lauren, Securities Regulation, Household Equity Ownership, and Trust in the Stock Market (January 14, 2019). Available at SSRN: https://ssrn.com/abstract=3067643 or http://dx.doi.org/10.2139/ssrn.3067643

Hans Bonde Christensen

University of Chicago - Booth School of Business ( email )

5807 South Woodlawn Avenue
Chicago, IL 60637
United States

Mark G. Maffett (Contact Author)

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

Lauren Vollon

University of Chicago Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
6192789642 (Phone)
6192789642 (Fax)

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