{"title":"Investment in risky assets and participation in the financial market: does financial literacy matter?","authors":"Andreas Oehler, Matthias Horn, Stefan Wendt","doi":"10.1007/s12232-023-00432-9","DOIUrl":null,"url":null,"abstract":"Abstract Our study contributes to a better understanding of the relationship between financial literacy and households’ investments in risky assets. We estimate a structural equation model with data from the Panel on Household Finances of the German central bank. Our results show that although households’ net wealth is the dominant driver of investments in risky assets, financial literacy plays a remarkable role. Financial literacy has an indirectly positive influence on participation in the financial market. The higher the financial literacy, the lower is the risk aversion. The lower the risk aversion, the higher is the participation in the financial market.","PeriodicalId":40021,"journal":{"name":"International Review of Economics","volume":"35 1","pages":"0"},"PeriodicalIF":0.0000,"publicationDate":"2023-09-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"International Review of Economics","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/10.1007/s12232-023-00432-9","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q2","JCRName":"Economics, Econometrics and Finance","Score":null,"Total":0}
引用次数: 0
Abstract
Abstract Our study contributes to a better understanding of the relationship between financial literacy and households’ investments in risky assets. We estimate a structural equation model with data from the Panel on Household Finances of the German central bank. Our results show that although households’ net wealth is the dominant driver of investments in risky assets, financial literacy plays a remarkable role. Financial literacy has an indirectly positive influence on participation in the financial market. The higher the financial literacy, the lower is the risk aversion. The lower the risk aversion, the higher is the participation in the financial market.
期刊介绍：
International Review of Economics - Journal of Civil Economy (IREC) covers a broad range of macro- and microeconomic topics, and showcases high-quality empirical, theoretical and policy-oriented contributions. In particular, IREC welcomes papers focused on the analysis of social interactions, wellbeing, welfare and happiness, capabilities, reciprocity, trust, relational goods, formal and informal institutions, law and economics, prizes and incentives, economics and philosophy, economic theology, the history of economic thought, non-profit organizations, and social economy. Civil Economy refers to a 18th-century Southern European tradition, which views the market as a pre-condition for civilization. Today, Civil Economy denotes a special focus on the ‘civil’ and ethical dimensions of economic issues, and on pursuing the common good in the economic domain. Officially cited as: Int Rev Econ
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