Maarten <!>van Rooij|Annamaria Lusardi|Rob Alessie
Financial Literacy and Stock Market Participation
Network for Studies on Pensions, Aging and Retirement|De Nederlandsche Bank|National Bureau of Economic Research|George Washington University|Utrecht University
individuals increasingly put charge financial security retirement moreover supply complex financial products increased considerably years however still little information whether individuals financial knowledge skills navigate new financial environment better understand financial literacy relation financial decisionmaking devised two special modules dnb household survey designed questions measure numeracy basic knowledge related working inflation interest rates well questions measure advanced financial knowledge related financial market instruments stocks bonds mutual funds evaluate importance financial literacy studying relation stock market financially knowledgeable individuals likely hold stocks assess direction causality make use questions measuring financial knowledge investing stock market find understanding basic economic concepts related inflation interest rate compounding far perfect outperforms limited knowledge stocks bonds concept risk diversification working financial markets also find measurement financial literacy sensitive wording survey questions provides additional evidence limited financial knowledge finally report evidence independent effect financial literacy stock market participation low financial literacy significantly less likely invest stocks