Download This PaperThe Long-Lasting Effects of Living under Communism on Attitudes towards Financial Markets
85 Pages Posted: 25 Feb 2020 Last revised: 17 Sep 2023
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The Long-Lasting Effects of Living under Communism on Attitudes towards Financial Markets
The Long-Lasting Effects of Living Under Communism on Attitudes Towards Financial Markets
Date Written: January 7, 2020
Abstract
We show that exposure to anti-capitalist ideology can exert a lasting influence on attitudes towards capital markets and stock-market participation. Utilizing novel survey, bank, and broker data, we document that, decades after Germany's reunification, East Germans invest significantly less in stocks and hold more negative views on capital markets. Effects vary by personal experience under communism. Results are strongest for individuals remembering life in the German Democratic Republic positively, e. g., because of local Olympic champions or living in a "showcase city". Results reverse for those with negative experiences like religious oppression, environmental pollution, or lack of Western TV entertainment.
Keywords: Capital markets, Communism, Memory, Emotional tagging, Stock-market participation
JEL Classification: D03, D14, D83, D84, E21, G11
Suggested Citation: Suggested Citation
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Alexandra Niessen-Ruenzi
European Corporate Governance Institute (ECGI)
c/o the Royal Academies of Belgium
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Belgium