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Financial Advice and Stock Market Participation
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Financial Advice and Stock Market Participation

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  • Inderst, Roman
  • Georgarakos, Dimitris

Abstract

We introduce professional financial advice in households? choice to hold risky financial assets. Consistent with the predictions from a formal model, we present evidence that households? trust in financial advice only matters when their perceived own financial capability is low. Instead, for households with higher financial capability, only the perception of legal protection in financial markets matters for stock market participation. Our empirical analysis highlights economically significant differences in households? perception of their rights as consumers of financial services, even when their objective circumstances should not be much different.

Suggested Citation

  • Inderst, Roman & Georgarakos, Dimitris, 2014. "Financial Advice and Stock Market Participation," CEPR Discussion Papers 9922, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:9922
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    More about this item

    Keywords

    Financial advice; Household finance; Trust; Consumer protection;
    All these keywords.

    JEL classification:

    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • E1 - Macroeconomics and Monetary Economics - - General Aggregative Models
    • G2 - Financial Economics - - Financial Institutions and Services

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