Business Education and Portfolio Returns

50 Pages Posted: 22 Nov 2022

See all articles by Adam Altmejd

Adam Altmejd

Stockholm University - Swedish Institute for Social Research (SOFI); Stockholm School of Economics - Department of Finance

Thomas Jansson

Sveriges Riksbank - Research Division

Yigitcan Karabulut

Frankfurt School of Finance & Management; CEPR

Date Written: November 18, 2022

Abstract

We provide evidence of a positive causal link between financial knowledge acquired through business education and returns on stock investments. Using exogenous variation generated by admission thresholds to university business programs in Sweden, we document that early investments in financial sophistication causes individuals to invest significantly more in the stock market, to earn higher portfolio returns, and to end up accumulating higher levels of wealth. Investments in financial sophistication at the launch of economic life thus significantly alters the life cycle wealth profiles of individuals.

Keywords: Financial literacy, portfolio choice, portfolio returns, household wealth accumulation.

JEL Classification: G51, G53, D31, G11.

Suggested Citation

Altmejd, Adam and Jansson, Thomas and Karabulut, Yigitcan, Business Education and Portfolio Returns (November 18, 2022). Available at SSRN: https://ssrn.com/abstract=4280536 or http://dx.doi.org/10.2139/ssrn.4280536

Adam Altmejd

Stockholm University - Swedish Institute for Social Research (SOFI) ( email )

Kyrkgatan 43B
SE-106 91 Stockholm
Sweden

Stockholm School of Economics - Department of Finance ( email )

SE-113 83 Stockholm
Sweden

Thomas Jansson

Sveriges Riksbank - Research Division ( email )

S-103 37 Stockholm
Sweden

Yigitcan Karabulut (Contact Author)

Frankfurt School of Finance & Management ( email )

Adickesallee 32-34
Frankfurt am Main, 60322
Germany

CEPR ( email )

London
United Kingdom

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