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Households’ Decision on Capital Market Participation : What Are the Drivers? A Multi-Factor Contribution to the Participation Puzzle
Oehler, Andreas; Horn, Matthias (2025): Households’ Decision on Capital Market Participation : What Are the Drivers? A Multi-Factor Contribution to the Participation Puzzle, in: Bamberg: Otto-Friedrich-Universität, S. 283–305.
Faculty/Chair:
Author:
Publisher Information:
Year of publication:
2025
Pages:
Source/Other editions:
Financial services review : the journal of individual financial management, Athens, Ohio: Academy of Financial Services, 2023, Jg. 31, Nr. 4, S. 283–305, ISSN: 1057-0810, 1873-5673
Year of first publication:
2023
Language:
English
Abstract:
Stock market investments are in the spotlight of the household finance literature, although real-world households make other financial decisions of higher relevance. We widen the scope and include decisions related to, e.g., voluntary pension plans, whole life insurance contracts, and housing and investments in other risky assets than stocks, e.g., bonds or mutual funds. Further, we provide a methodology that goes beyond regression analysis by employing a structural equation analysis (SEA) and apply it on data from a broad and representative survey of the German Central Bank. Our SEA allows us to investigate and quantitatively estimate complex relationships and to test several hypotheses simultaneously. Our structural equation model captures about 60% of the variation in the capital market participation decision. The results show that although households' financial literacy and risk aversion are most strongly related to investments in risky assets, further factors such as wealth, voluntary pension plans and whole life insurance contracts, financial advice, and investment experience should also be considered. Financial literacy is negatively related to risk aversion, i.e., the higher the financial literacy, the lower is the risk aversion. Age and gender are directly related to capital market participation and indirectly via financial literacy and risk attitude.
Keywords: ; ; ; ; ; ; ; ;
capital market participation
risk attitude
risky assets
household finance
structural equation analysis
financial literacy
financial decision making
human capital investment
life-cycle
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RVK Classification:
Peer Reviewed:
Yes:
International Distribution:
Yes:
Open Access Journal:
Yes:
Type:
Article
Activation date:
October 21, 2025
Permalink
https://fis.uni-bamberg.de/handle/uniba/110817