Lottery preference and stock market participation: evidence from China

PurposeThis paper studies the effects of lottery preference on stock market participation at the macro level.Design/methodology/approachThe authors use the abnormal search volume intensity for lottery-related keywords from the Baidu search engine to capture retail investors' lottery preference. To measure stock market participation, they use five different macro-level measures from various angles. They perform the time series regression analysis in their empirical study.FindingsFirst, the validation tests show that the lottery preference index in this study is reasonable. Further, the authors find that lottery preference increases people's propensity to enter and trade in the stock market. Besides, they find that the effect on trading behavior is asymmetric, that is, high lottery preference has a more significant impact on trading behavior than low lottery preference. However, lottery preference has no significant effect on the stockholding.Originality/valueThis paper contributes to the growing literature that examines the determinants of stock market participation and the role of lottery/gambling preference in the financial market. It also provides direct and novel evidence for Statman's (2002) conclusions about the similarity of lottery players and stock traders.

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Investor attention using the Google search volume index – impact on stock returns

Review of Behavioral Finance ◽

10.1108/rbf-04-2018-0033 ◽

2019 ◽

Vol 11 (1) ◽

pp. 55-69 ◽

Cited By ~ 4

Author(s):

Vighneswara Swamy ◽

Munusamy Dharani

Keyword(s):

Stock Market ◽

Stock Returns ◽

Volume Index ◽

Trading Behavior ◽

Excess Returns ◽

Investor Attention ◽

Content Type ◽

Search Volume ◽

Indian Stock Market ◽

Google Search

Purpose The purpose of this paper is to investigate whether the investor attention using the Google search volume index (GSVI) can be used to forecast stock returns. The authors also find the answer to whether the “price pressure hypothesis” would hold true for the Indian stock market. Design/methodology/approach The authors employ a more recent fully balanced panel data for the period from July 2012 to Jun 2017 (260 weeks) of observations for companies of NIFTY 50 of the National Stock Exchange in the Indian stock market. The authors are motivated by Tetlock (2007) and Bijl et al. (2016) to employ regression approach of econometric estimation. Findings The authors find that high Google search volumes lead to positive returns. More precisely, the high Google search volumes predict positive and significant returns in the subsequent fourth and fifth weeks. The GSVI performs as an useful predictor of the direction as well as the magnitude of the excess returns. The higher quantiles of the GSVI have corresponding higher excess returns. The authors notice that the domestic investor searches are correlated with higher excess returns than the worldwide investor searches. The findings imply that the signals from the search volume data could be of help in the construction of profitable trading strategies. Originality/value To the best of the authors knowledge, no paper has examined the relationship between Google search intensity and stock-trading behavior in the Indian stock market. The authors use a more recent data for the period from 2012 to 2017 to investigate whether search query data on company names can be used to predict weekly stock returns for individual firms. This study complements the prior studies by investigating the relationship between search intensity and stock-trading behavior in the Indian stock market.

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Attitudinal factors, financial literacy, and stock market participation

International Journal of Bank Marketing ◽

10.1108/ijbm-01-2016-0012 ◽

2017 ◽

Vol 35 (5) ◽

pp. 818-841 ◽

Cited By ~ 21

Author(s):

Sreeram Sivaramakrishnan ◽

Mala Srivastava ◽

Anupam Rastogi

Keyword(s):

Stock Market ◽

Financial Literacy ◽

Negative Impact ◽

Emerging Market ◽

Well Being ◽

Policy Implications ◽

Market Participation ◽

Content Type ◽

Stock Market Participation ◽

Investor Behaviour

Purpose The purpose of this paper is to study the influence of factors such as financial literacy on a consumer’s investment decisions, particularly in the stock market. Based on two empirical studies, the theory of planned behaviour (TPB) was used to understand stock market participation (SMP) in India while developing a model to represent the relationships between the various factors. Consumer financial literacy was conceptualised to be a part of perceived behavioural control and included in the TPB. Design/methodology/approach A mixed methods research was followed where qualitative research preceded a quantitative survey-based study. In-depth interviews were conducted with investors and experts, results of which, when combined with the literature review, revealed seven variables including financial literacy which were pooled into three distinct groups based on the TPB. Responses obtained from 506 retail investors from four cities in India were analysed. Structural equation modelling was used to test the models and arrive at a final empirical model. Findings Results of the study indicated that investment intention predicts actual investments in the stock market (which represented behaviour). Financial literacy – both subjective and objective – were also found to be significant influencers on intention while only objective financial literacy seemed to affect behaviour. Three variables – perception of regulator, risk avoidance, and hassle factor – were combined to form a second-order construct which was named “Attitude to Investment Behaviour”. This had a negative impact on intention to invest in the equity markets. Financial well-being seemed to have a negative impact on intention while having a positive relationship with behaviour. Practical implications The results present significant investor behaviour and policy implications for financial services marketing. Some interventions, especially in the area of consumer financial literacy, are more likely than others to help consumers bridge the gap between non-participation and participation in the stock market. Originality/value The study makes a contribution to investor behaviour theory in the form of a comprehensive model to explain SMP in an emerging market. This can be further tested across geographies.

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The role of internet in stock market participation: just a matter of habit?

Information Technology and People ◽

10.1108/itp-06-2017-0191 ◽

2018 ◽

Vol 31 (3) ◽

pp. 869-885 ◽

Cited By ~ 2

Author(s):

Sara Fernández-López ◽

Lucía Rey-Ares ◽

Milagros Vivel-Búa

Keyword(s):

Stock Market ◽

Internet Usage ◽

Necessary Condition ◽

The Internet ◽

Market Participation ◽

Content Type ◽

Stock Market Participation ◽

Internet Users ◽

Social Multiplier ◽

Use Of The Internet

Purpose The purpose of this paper is to adopt a behavioural approach to explain how the internet use influences stock market participation (SMP) decisions. Design/methodology/approach Drawing on the literature on sociability and SMP, this paper analyses whether virtual sociability affects SMP decision in a sample of 34,715 individuals in 14 European countries. Findings The results show that internet users are more likely to be stockowners. However, the obtained evidence does not support either an informational effect or a social multiplier effect of the virtual sociability. After controlling by the country’s SMP rates, a positive effect of internet usage on SMP decision remains, suggesting that contextual factors matter rather than internet usage per se. Thus, in countries where individuals are “used” to being stockholders, the habit of using internet increases SMP, but the “breeding ground” is a necessary condition. Originality/value The massive use of the internet provides a valuable opportunity to find evidence of the frictional costs which would act as inhibitors of the SMP, as economic theory hypothesised. After some promising results, the differences in the evolution of both the SMP and internet usage rates have not confirmed the initial enthusiasm. In addition, the question of why the SMP rates systematically differ across countries still remains open.

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Is household registration system responsible for the limited participation of stock market in China?

Review of Behavioral Finance ◽

10.1108/rbf-12-2019-0177 ◽

2020 ◽

Vol ahead-of-print (ahead-of-print) ◽

Author(s):

Yulin Liu ◽

Min Zhang

Keyword(s):

Stock Market ◽

Urban Areas ◽

Market Participation ◽

Limited Participation ◽

Household Registration ◽

Registration System ◽

Content Type ◽

Stock Market Participation ◽

Household Registration System ◽

The Impact

PurposeThis paper aims to examine the effect of China’s unique household registration system (hukou) on stock market participation.Design/methodology/approachIn an effort to estimate the effect of hukou on households' financial behavior, we draw on data from China Family Panel Studies (CFPS) and use probit model and tobit model to test the effect of hukou on households stock market participation.FindingsThe results are with strong interpretative power over the limited participation of stock market in China-investors living in urban areas with urban hukou are more likely to participate in stock markets and allocate a larger fraction of financial assets to stocks and remarkably robust to a battery of robustness checks. The dual structure of social security caused by the household registration system could explain this result. Furthermore, marriage plays such a role of integrating social resources attached to hukou that only the marriage of individuals with urban hukou could significantly promote households' participation in the stock market. For married families, a household in which both husband and wife have urban hukou has a greater possibility to invest in stocks relative to those with rural hukou.Originality/valueThis paper contributes to the literature in two ways. First, much literature focuses on the stock market limited participation puzzle and gives explanations from the perspectives of individual heterogeneity and financial markets. This paper examines the effect of hukou. Such an idea is instructive to some developing countries where residents are treated differently because of the institutional reason. Second, the effects we find are economically meaningful. Our estimates indicate that medical insurance attached to hukou can explain almost 58% of the impact of hukou, which suggests that the key to reforming China's current household registration system is to make welfare separate from hukou. Moreover, homogamy based on hukou widens the gap of households' risky assets, which provides a new view to understand the income gap in the cities of China and the heterogeneous effect of marriage on stock market participation.

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