Publicação
The association between financial literacy and financial market participation
| Resumo: | The present research has the purpose to analyze the main drivers of market participation and to better understand the association between the individual’s financial literacy and financial market inclusion. Furthermore, we intend to analyze the effects of financial crisis towards financial market participation, in the context of COVID-19 health crisis that severely affected the Portuguese economy and shaped the investor’s financial behaviors. There is literature stating that financial literacy promotes financial market inclusion, but there are only few studies analyzing the effects of financial crises on the main drives of market participation, and the most only specifically refer to stock market participation and not the general market participation. Therefore, we found it important to analyze the differences on the investor’s behavior towards different dimensions of market participation and the main drivers that promote financial inclusion. We use two parallel surveys from CMVM, the 2018 and 2020 Online Investor Survey Results, that were carried out to measure the investing behaviors of Portuguese investors, in which the survey of 2020 was conducted alongside the COVID-19 health crisis. To measured financial literacy, we constructed two different indexes and we explore different dimensions of financial market participation, from its depth and breadth. We found that with respect to financial market inclusion what matters the most is the advanced financial literacy. Demographic characteristics present a positive relationship with any of the dimensions of financial market participation considered in this study. In times of economic and financial growth, what matters the most for participating in the financial markets is the investor’s risk perception and its level of income, where any level of the individual’s financial literacy is not statistically significant. However, our results suggest that in times of financial recession or economic instability the individual’s advanced financial literacy represents an essential role to explain any form of market participation. |
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| Autores principais: | Sousa, Diogo André Gonçalves |
| Assunto: | Financial literacy Market participation Financial crisis Risk perception Literacia financeira Participação nos mercados financeiros Crises financeiras Perceção de risco |
| Ano: | 2021 |
| País: | Portugal |
| Tipo de documento: | dissertação de mestrado |
| Tipo de acesso: | acesso aberto |
| Instituição associada: | Universidade de Lisboa |
| Idioma: | inglês |
| Origem: | Repositório da Universidade de Lisboa |
| Resumo: | The present research has the purpose to analyze the main drivers of market participation and to better understand the association between the individual’s financial literacy and financial market inclusion. Furthermore, we intend to analyze the effects of financial crisis towards financial market participation, in the context of COVID-19 health crisis that severely affected the Portuguese economy and shaped the investor’s financial behaviors. There is literature stating that financial literacy promotes financial market inclusion, but there are only few studies analyzing the effects of financial crises on the main drives of market participation, and the most only specifically refer to stock market participation and not the general market participation. Therefore, we found it important to analyze the differences on the investor’s behavior towards different dimensions of market participation and the main drivers that promote financial inclusion. We use two parallel surveys from CMVM, the 2018 and 2020 Online Investor Survey Results, that were carried out to measure the investing behaviors of Portuguese investors, in which the survey of 2020 was conducted alongside the COVID-19 health crisis. To measured financial literacy, we constructed two different indexes and we explore different dimensions of financial market participation, from its depth and breadth. We found that with respect to financial market inclusion what matters the most is the advanced financial literacy. Demographic characteristics present a positive relationship with any of the dimensions of financial market participation considered in this study. In times of economic and financial growth, what matters the most for participating in the financial markets is the investor’s risk perception and its level of income, where any level of the individual’s financial literacy is not statistically significant. However, our results suggest that in times of financial recession or economic instability the individual’s advanced financial literacy represents an essential role to explain any form of market participation. |
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