Work

Neighbors Matter: Causal Community Effects and Stock Market Participation

Year: 2007

Type: report

Abstract: This paper establishes a causal relation between an individual's decision of whether to own stocks and average stock market participation decision of the individual's community.We instrument for the average ownership of an individual's community with lagged average ownership of the states in which one's non-native neighbors were born.Combining this instrumental variables approach with controls for individual and community fixed effects, a broad set of time-varying individual and community controls, and state-by-year effects, rules out alternative explanations.To further establish that word-of-mouth communication drives this causal effect, we show that the results are stronger in more sociable communities.

Source: National Bureau of Economic Research

DOI: 10.3386/w13168

Authors: Jeffrey Brown, Zoran Ivkovich, Paul Smith, Scott Weisbenner

Institutions: DePaul University, National Bureau of Economic Research, Harvard University, University of Illinois Urbana-Champaign, University of Michigan, Federal Reserve Board of Governors, University of Virginia, Michigan State University

Language: English

Topic: Financial Literacy, Pension, Retirement Analysis

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

Open Access status: green

OpenAlex ID: W2890669522

Cites: 27

Cited by: 181

Related to: 10