Income and Social Communication: The Demographics of Stock Market Participation

World Economy, Vol. 42, No. 7, 2019

43 Pages Posted: 11 Sep 2019

See all articles by Ming Gao

Ming Gao

Peking University - School of Economics

Juanjuan Meng

Peking University - Guanghua School of Management

Longkai Zhao

Peking University - Department of Finance

Date Written: July 2019

Abstract

This paper analyses the determinants of stock market participation decisions using officially compiled aggregate stock account opening data in China. Different from the literature that often focuses on one particular dimension, our paper systematically evaluates the relative importance of disposable income, demographic variables, macroeconomic factors, stock market conditions and social communication on both the level and the change of the participation rate. We find that the level of the participation rate is predominately determined by the income factor, followed by various measures of social communication. Social communication plays the most important role in the change of the participation rate, acting as a multiplier to stimulate stock market participation. The effects are more pronounced in high‐income, high‐education, high‐population‐density groups and during the bull market period.

Keywords: disposable income, social communication, stock market participation

JEL Classification: D83, E44, G11

Suggested Citation

Gao, Ming and Meng, Juanjuan and Zhao, Longkai, Income and Social Communication: The Demographics of Stock Market Participation (July 2019). World Economy, Vol. 42, No. 7, 2019. Available at SSRN: https://ssrn.com/abstract=3446026

Ming Gao

Peking University - School of Economics ( email )

Beijing, 100871
China

HOME PAGE: http://scholar.pku.edu.cn/gao

Juanjuan Meng (Contact Author)

Peking University - Guanghua School of Management ( email )

Peking University
Beijing, Beijing 100871
China

HOME PAGE: http://www.gsm.pku.edu.cn/faculty_and_research/en/en_teacherDetail.html?crmurl=http://crm.gsm.pku.ed

Longkai Zhao

Peking University - Department of Finance ( email )

Beijing, 100871
China

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