Determinants of Stock Market Participation

Lukas Menkhoff and Jannis Westermann

No 2078, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research

Abstract: The low degree of stock market participation (SMP) is one of the big puzzles in finance. Numerous determinants have been proposed. We put these determinants into a structure that is derived from a standard static portfolio model. Then we discuss arguments put forward regarding specific SMP determinants and the empirical evidence that has been provided. The focus of our survey is on the identification of a causal impact of determinants on SMP via shocks. We summarize the evidence by suggesting established and likely SMP determinants and providing an outlook for future research and policy.

Keywords: Stock market participation; transaction costs; information; return volatility; risk tolerance (search for similar items in EconPapers)
JEL-codes: G11 G51 (search for similar items in EconPapers)
Pages: 52 p.
Date: 2024
New Economics Papers: this item is included in nep-fdg and nep-fmk
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