Scandinavian Working Papers in Economics
Working Paper Series,
Royal Institute of Technology, Department of Real Estate and Construction Management & Banking and Finance
No 21/1: The medium is the message: learning channels, financial literacy, and stock market participation
Cecilia Hermansson (), Sara Jonsson () and Lu Liu ()
Additional contact information
Cecilia Hermansson: Department of Real Estate and Construction Management, Royal Institute of Technology, Postal: Division of Real Estate Economics and Finance, Teknikringen 10B, 100 44 Stockholm, Sweden
Sara Jonsson: Stockholm University, Postal: Stockholm Business School, Finance Section, Stockholm University, SE-106 91 Stockholm, Sweden
Lu Liu: Stockholm University, Postal: Stockholm Business School, Finance Section, Stockholm University, SE-106 91 Stockholm, Sweden
Abstract: This paper investigates the effects of learning channels on stock market participation. More specifically, we investigate the direct effects of learning about financial matters from one’s private network, financial advisors, and the media, as well as the interactive effects of financial literacy and these learning channels. Analyzing a unique cross-section data that combine survey data and bank register data on retail investors, we find that media are the only learning channel that increases the likelihood of stock market participation. Interactions point to the joint importance of financial literacy and media as a learning channel for individuals’ stock market participation. Constructing theme–based literacy measures, we conclude that only financial knowledge related to investments in risky assets affects stock market participation. Our findings suggest implications to policymakers when designing financial education programs.
Keywords: stock market participation; learning channels; private network; financial advisors; media; financial literacy
JEL-codes: D14; D83; G41; G51; G53
52 pages, First version: February 27, 2021. Revised: June 28, 2021.
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