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The medium is the message: Learning channels, financial literacy, and stock market participation

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  • Hermansson, Cecilia
  • Jonsson, Sara
  • Liu, Lu

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 moderating effects of financial literacy on the relationship between learning from these channels and stock market participation. Analyzing a unique cross-section data that combine survey data and bank register data on individual retail investors, we find that media is the only learning channel that increases the likelihood of owning stocks and the portfolio share invested in stocks. We also find that financial literacy has a significant moderating effect: Interactions point to the joint importance of learning from media and financial literacy for individuals' stock market participation. Our findings suggest implications to policymakers when designing financial education programs.

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  • Hermansson, Cecilia & Jonsson, Sara & Liu, Lu, 2022. "The medium is the message: Learning channels, financial literacy, and stock market participation," International Review of Financial Analysis, Elsevier, vol. 79(C).
    • Handle: RePEc:eee:finana:v:79:y:2022:i:c:s1057521921003124
    DOI: 10.1016/j.irfa.2021.101996
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    2. Marshall Wellington Blay & Alhassan Musah & Charles Ayariga & Daniel Odei Okyere, 2024. "Determinants of Financial Literacy and its Effect on Stock Market Participation among University Students in Ghana," International Journal of Economics and Financial Issues, Econjournals, vol. 14(2), pages 15-25, March.
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    4. Isidore, Renu & Arun, C. Joe, 2023. "The Moderating Effect of Financial Literacy on the Relationship Between Decision-Making Tools and Equity Returns in the Indian Secondary Equity Market," Revista Finanzas y Politica Economica, Universidad Católica de Colombia, vol. 15(1), pages 185-211, January.
    5. Xie, Qian & Ke, Haie & Peng, Juan, 2024. "Impacts of Financial Literacy on Elderly Households’ Consumption," Finance Research Letters, Elsevier, vol. 62(PA).

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    More about this item

    Keywords

    Stock market participation; Learning channels; Private network; financial advisors; Media; Financial literacy;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • G53 - Financial Economics - - Household Finance - - - Financial Literacy

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