IDEAS home Printed from https://ideas.repec.org/a/bla/pacecr/v19y2014i5p537-558.html
   My bibliography  Save this article

Participation of Ordinary Investors and Stock Market Quality: A Comparison between Japanese and US Markets

Author

Listed:
  • Makoto Yano
  • Takashi Komatsubara

Abstract

This study investigates the quality of Japanese and US stock markets from the viewpoints of efficiency and fairness. We design a new Internet survey and develop a simple model that can quantitatively explain stock market quality by those data. Our estimation shows that the Japanese stock market is of lower quality with respect both to efficiency and fairness than the US stock market. This suggests that the quarter-century-long stagnation of the Japanese economy since the early 1990s might be attributable to the lack of high quality stock markets in Japan.

Suggested Citation

  • Makoto Yano & Takashi Komatsubara, 2014. "Participation of Ordinary Investors and Stock Market Quality: A Comparison between Japanese and US Markets," Pacific Economic Review, Wiley Blackwell, vol. 19(5), pages 537-558, December.
    • Handle: RePEc:bla:pacecr:v:19:y:2014:i:5:p:537-558
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1111/1468-0106.12082
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Luigi Guiso & Paola Sapienza & Luigi Zingales, 2004. "The Role of Social Capital in Financial Development," American Economic Review, American Economic Association, vol. 94(3), pages 526-556, June.
    2. Luigi Guiso & Paola Sapienza & Luigi Zingales, 2008. "Trusting the Stock Market," Journal of Finance, American Finance Association, vol. 63(6), pages 2557-2600, December.
    3. Anonymous, 2014. "Introduction to the Issue," Journal of Wine Economics, Cambridge University Press, vol. 9(2), pages 109-110, August.
    4. Mariassunta Giannetti & Tracy Yue Wang, 2016. "Corporate Scandals and Household Stock Market Participation," Journal of Finance, American Finance Association, vol. 71(6), pages 2591-2636, December.
    5. van Rooij, Maarten & Lusardi, Annamaria & Alessie, Rob, 2011. "Financial literacy and stock market participation," Journal of Financial Economics, Elsevier, vol. 101(2), pages 449-472, August.
    6. Christelis, Dimitris & Jappelli, Tullio & Padula, Mario, 2010. "Cognitive abilities and portfolio choice," European Economic Review, Elsevier, vol. 54(1), pages 18-38, January.
    7. Krishnendu Ghosh Dastidar & Fumio Dei, 2014. "Introduction to the Special Issue of Pacific Economic Review on Market Quality Economics," Pacific Economic Review, Wiley Blackwell, vol. 19(5), pages 531-536, December.
    8. repec:bla:reviec:v:17:y:2009:i:si:p:244-260 is not listed on IDEAS
    9. Fumio Dei, 2011. "Quality of Labor Markets in a Developing Country," Review of International Economics, Wiley Blackwell, vol. 19(4), pages 626-633, September.
    10. Bewley, Truman, 1982. "An integration of equilibrium theory and turnpike theory," Journal of Mathematical Economics, Elsevier, vol. 10(2-3), pages 233-267, September.
    11. Wanida Ngienthi, 2013. "Offshoring Prompts High Quality Labour Markets," Pacific Economic Review, Wiley Blackwell, vol. 18(5), pages 628-643, December.
    12. Anonymous, 2014. "Introduction to the Issue," Journal of Wine Economics, Cambridge University Press, vol. 9(1), pages 1-2, May.
    13. Furukawa, Yuichi, 2010. "Intellectual property protection and innovation: an inverted-U relationship," Economics Letters, Elsevier, vol. 109(2), pages 99-101, November.
    14. Yunfang Hu & Kazuo Mino, 2014. "Capital Accumulation and Structural Change in a Small Open Economy," Pacific Economic Review, Wiley Blackwell, vol. 19(5), pages 634-656, December.
    15. Yuichi Furukawa & Makoto Yano, 2014. "Market quality and market infrastructure in the South and technology diffusion," International Journal of Economic Theory, The International Society for Economic Theory, vol. 10(1), pages 139-146, March.
    16. Sarbajit Chaudhuri & Krishnendu Ghosh Dastidar, 2014. "Corruption, Efficiency Wage and Union Leadership," Pacific Economic Review, Wiley Blackwell, vol. 19(5), pages 559-576, December.
    17. Makoto Yano, 2009. "The Foundation Of Market Quality Economics," The Japanese Economic Review, Japanese Economic Association, vol. 60(1), pages 1-32, March.
    18. Asgharian, Hossein & Liu, Lu & Lundtofte, Frederik, 2014. "Institutional Quality, Trust and Stock-Market Participation: Learning to Forget," Working Papers 2014:39, Lund University, Department of Economics.
    19. Noriaki Matsushima & Fumitoshi Mizutani, 2014. "How Does Market Size Affect Vertical Structure When Considering Vertical Coordination? Application to the Railway Industry," Pacific Economic Review, Wiley Blackwell, vol. 19(5), pages 657-676, December.
    20. Tetsuro Mizoguchi & Nguyen Van Quyen, 2014. "Corruption in Public Procurement Market," Pacific Economic Review, Wiley Blackwell, vol. 19(5), pages 577-591, December.
    21. Una Okonkwo Osili & Anna L. Paulson, 2008. "Institutions and Financial Development: Evidence from International Migrants in the United States," The Review of Economics and Statistics, MIT Press, vol. 90(3), pages 498-517, August.
    22. Takuma Kunieda & Akihisa Shibata, 2014. "Credit Market Imperfections and Macroeconomic Instability," Pacific Economic Review, Wiley Blackwell, vol. 19(5), pages 592-611, December.
    23. Takuma Kunieda & Keisuke Okada & Akihisa Shibata, 2014. "Corruption, capital account liberalization, and economic growth: Theory and evidence," International Economics, CEPII research center, issue 139, pages 80-108.
    24. Mark Grinblatt & Matti Keloharju & Juhani Linnainmaa, 2011. "IQ and Stock Market Participation," Journal of Finance, American Finance Association, vol. 66(6), pages 2121-2164, December.
    25. Yan Ma & Fumio Dei, 2009. "Product Quality, Wage Inequality, and Trade Liberalization," Review of International Economics, Wiley Blackwell, vol. 17(2), pages 244-260, May.
    26. Makoto Yano, 1998. "On the Dual Stability of a von Neumann Facet and the Inefficacy of Temporary Fiscal Policy," Econometrica, Econometric Society, vol. 66(2), pages 427-452, March.
    27. repec:cii:cepiei:2014-q3-139-5 is not listed on IDEAS
    28. Makoto Yano, 2008. "Competitive fairness and the concept of a fair price under Delaware law on M&A," International Journal of Economic Theory, The International Society for Economic Theory, vol. 4(2), pages 175-190, June.
    29. Hiroshi Daisaka & Taiji Furusawa & Noriyuki Yanagawa, 2014. "Globalization, Financial Development and Income Inequality," Pacific Economic Review, Wiley Blackwell, vol. 19(5), pages 612-633, December.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Francisco Gomes & Michael Haliassos & Tarun Ramadorai, 2021. "Household Finance," Journal of Economic Literature, American Economic Association, vol. 59(3), pages 919-1000, September.
    2. Krishnendu Ghosh DASTIDAR & YANO Makoto, 2017. "In many emerging economies corruption, poor quality of information and poor governance lead to restricted entry. In this paper we analyze the determinants of the .height.of entry barrier in a developi," Discussion papers 17010, Research Institute of Economy, Trade and Industry (RIETI).
    3. Kaustia, Markku & Conlin, Andrew & Luotonen, Niilo, 2023. "What drives stock market participation? The role of institutional, traditional, and behavioral factors," Journal of Banking & Finance, Elsevier, vol. 148(C).
    4. Luc Arrondel, 2020. "Financial literacy and French behaviour on the stock market," Working Papers halshs-02505320, HAL.
    5. Guiso, Luigi & Sodini, Paolo, 2013. "Household Finance: An Emerging Field," Handbook of the Economics of Finance, in: G.M. Constantinides & M. Harris & R. M. Stulz (ed.), Handbook of the Economics of Finance, volume 2, chapter 0, pages 1397-1532, Elsevier.
    6. Apergis, Nicholas, 2023. "Religion groups and portfolio choice decisions: Evidence from UK households," Finance Research Letters, Elsevier, vol. 54(C).
    7. Takuma Kunieda & Akihisa Shibata, 2014. "Credit Market Imperfections and Macroeconomic Instability," Pacific Economic Review, Wiley Blackwell, vol. 19(5), pages 592-611, December.
    8. Luik, Marc-André & Berlemann, Michael, 2014. "Institutional Reform and Depositors’ Portfolio Choice: Evidence from Censored Quantile Regressions," VfS Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100291, Verein für Socialpolitik / German Economic Association.
    9. Delis, Manthos D. & Dioikitopoulos, Evangelos V. & Ongena, Steven, 2023. "Population diversity and financial risk-taking," Journal of Banking & Finance, Elsevier, vol. 151(C).
    10. Yuree Lim & Kyoung Tae Kim, 2019. "Afraid of the stock market," Review of Quantitative Finance and Accounting, Springer, vol. 53(3), pages 773-810, October.
    11. Feng, Chen & Bai, Caiquan & Kang, Yankun, 2023. "Historical social capital and contemporary private investment choices," Journal of Corporate Finance, Elsevier, vol. 79(C).
    12. Bu, Di & Hanspal, Tobin & Liao, Yin, 2022. "Political corruption, trust, and household stock market participation," Journal of Banking & Finance, Elsevier, vol. 138(C).
    13. Krishnendu Ghosh DASTIDAR & YANO Makoto, 2020. "FCPA and Market Quality in Emerging Economies," Discussion papers 20087, Research Institute of Economy, Trade and Industry (RIETI).
    14. Lee, Boram & Rosenthal, Leonard & Veld, Chris & Veld-Merkoulova, Yulia, 2015. "Stock market expectations and risk aversion of individual investors," International Review of Financial Analysis, Elsevier, vol. 40(C), pages 122-131.
    15. Bellofatto, Anthony & Broihanne, Marie-Hélène & D'Hondt, Catherine, 2019. "Appetite for information and trading behavior," LIDAM Discussion Papers LFIN 2019002, Université catholique de Louvain, Louvain Finance (LFIN).
    16. Wen, Chufu & Zhao, Xinyu & Xu, Longhao & Yin, Hua, 2023. "Military experience and household stock market participation: Evidence from China," International Review of Financial Analysis, Elsevier, vol. 86(C).
    17. Briggs, Joseph & Cesarini, David & Lindqvist, Erik & Östling, Robert, 2021. "Windfall gains and stock market participation," Journal of Financial Economics, Elsevier, vol. 139(1), pages 57-83.
    18. repec:vul:omefvu:v:9:y:2017:i:2:id:234 is not listed on IDEAS
    19. Conlin, Andrew & Kyröläinen, Petri & Kaakinen, Marika & Järvelin, Marjo-Riitta & Perttunen, Jukka & Svento, Rauli, 2015. "Personality traits and stock market participation," Journal of Empirical Finance, Elsevier, vol. 33(C), pages 34-50.
    20. Luc Arrondel, 2018. "Financial Literacy and Asset Behaviour: Poor Education and Zero for Conduct?," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 60(1), pages 144-160, March.
    21. Brown, James R. & Cookson, J. Anthony & Heimer, Rawley Z., 2019. "Growing up without finance," Journal of Financial Economics, Elsevier, vol. 134(3), pages 591-616.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:pacecr:v:19:y:2014:i:5:p:537-558. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=1361-374X .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.