Neighbors matter: Causal community effects and stock market participation

• 成果类型: Article
• 署名作者: Brown, Jeffrey R.; Ivkovic, Zoran; Smith, Paul A.; Weisbenner, Scott
• 署名单位: University of Illinois System; University of Illinois Urbana-Champaign; National Bureau of Economic Research; Michigan State University
• 刊物名称: JOURNAL OF FINANCE
• ISSN/ISSBN: 0022-1082
• DOI: 10.1111/j.1540-6261.2008.01364.x
• 发表日期: 2008
• 页码: 1509-1531
• 关键词: investment; geography

摘要

This paper establishes a causal relation between an individual's decision whether to own stocks and average stock market participation of the individual's community. We instrument for the average ownership of an individual's community with lagged average ownership of the states in which one's nonnative neighbors were born. Combining this instrumental variables approach with controls for individual and community fixed effects, a broad set of time-varying individual and community controls, and state-year effects rules out alternative explanations. To further establish that word-of-mouth communication drives this causal effect, we show that the results are stronger in more sociable communities.