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The determinants of retail trading activity in emerging markets: A cross-market analysis

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  • Alderighi, Stefano

Abstract

This paper is the first to provide empirical evidence on the determinants of retail trading at a market level. Exploiting a unique proprietary database representing 13 emerging markets, we use cross-market analyses to investigate whether transaction costs, financial literacy programs, tax interventions, and availability of nonequity products influence equity retail trading. We find that retail trading activity is very responsive to changes in transaction costs and the availability of fixed-income products, more mildly responsive to financial literacy programs, but not sensitive to tax interventions. Our results suggest that retail investors, in the aggregate, behave according to theoretical predictions.

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  • Alderighi, Stefano, 2018. "The determinants of retail trading activity in emerging markets: A cross-market analysis," Global Finance Journal, Elsevier, vol. 37(C), pages 152-167.
    • Handle: RePEc:eee:glofin:v:37:y:2018:i:c:p:152-167
    DOI: 10.1016/j.gfj.2018.05.001
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    Cited by:

    1. Alderighi, Stefano & Cleary, Siobhan & Varanasi, Padmasai, 2018. "The determinants of cross-border portfolio equity flows: new evidence from emerging markets," Economics Discussion Papers 23310, University of Essex, Department of Economics.
    2. Alderighi, Stefano & Cleary, Siobhan & Varanasi, Padmasai, 2019. "Do institutional factors influence cross-border portfolio equity flows? New evidence from emerging markets," Journal of International Money and Finance, Elsevier, vol. 99(C).

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    More about this item

    Keywords

    Individual trading; Stock markets; Emerging markets; Transaction costs; Financial literacy programs;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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