Work

Investment in risky assets and participation in the financial market: does financial literacy matter?

Year: 2023

Type: article

Abstract: Our study contributes to a better understanding of the relationship between financial literacy and households’ investments in risky assets. We estimate a structural equation model with data from the Panel on Household Finances of the German central bank. Our results show that although households’ net wealth is the dominant driver of investments in risky assets, financial literacy plays a remarkable role. Financial literacy has an indirectly positive influence on participation in the financial market. The higher the financial literacy, the lower is the risk aversion. The lower the risk aversion, the higher is the participation in the financial market.

Source: International Review of Economics

DOI: 10.1007/s12232-023-00432-9

Authors: Andreas Oehler, Matthias Horn, Stefan Wendt

Institutions: University of Bamberg, Bifröst University

Language: English

Topic: Financial Literacy, Pension, Retirement Analysis

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

Open Access status: hybrid

Estimated APC paid: $2,990

Funder: Deutsche Bundesbank