Determinant elements of stock market participation among middle-aged individuals in Northern Finland

Abstract

Although stockholding rates have experienced slight but steady increment in the last two decades, stock market participation is still very far from universal among people. Finding the root-causes of lower-than-expected stock market participation among people has sparked off many ongoing debates in the area of behavioral finance. Irrespective of general economic prosperity and markets developments, in this thesis we tried to show what other fundamental drivers of stock market participation among individuals are. We took data on 6355 individuals who were born in 1966 in northern Finland and investigated to find most outstanding determinants of stock market participation.

According to our analysis, level of education, level of net-wealth and degree of risk seeking are in direct proportion with stock market participation. Additionally, marriage increases the likelihood of stockholding in men whereas married women are less likely to hold stock. One interesting result of our study is that, social interactions do not increase the probability of stockholding. In fact, parameters such as high degree of sociability with spouse, surprisingly created negative effects on probability of stockholding. Even after adding reward dependence variables including sentimentality, attachment and dependence into our regression analysis, the negative effects of within-family social interactions and marriage on stock market participation are strengthened.