Luca Spataro, Lorenzo Corsini

Endogenous Financial Literacy, Saving, and Stock Market Participation

Section: Articles
FinanzArchiv (FA)

Volume 73 () / Issue 2, pp. 135-162 (28)

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Recent empirical literature provides evidence that financial literacy, human capital, education, saving, and stock market participation are interconnected decisions. However, a consolidated theoretical explanation of such connections is missing. We contribute to this topic by building a framework that includes all these decisions in an encompassing model. We build a two-period model in which individuals acquire education, work, and save for retirement; financial literacy reduces the costs of managing risky assets available on the stock market. Our results, besides providing a theoretical foundation for the role and the determinants of the above-mentioned decisions, can also explain several stylized facts on literacy, human capital, and stock market participation.

Luca Spataro No current data available.

Lorenzo Corsini No current data available.