JOURNAL OF ACCOUNTING AND FINANCE
The Role of Objective and Subjective Financial Literacy in Stock Market Participation: The SCF Evidence
Author(s): Yuan Yuan
Citation: Yuan Yuan, (2018) "The Role of Objective and Subjective Financial Literacy in Stock Market Participation: The SCF Evidence", Journal of Accounting and Finance, Vol. 18, ss. 10, pp. 154-164
Article Type: Research paper
Publisher: North American Business Press
Abstract:
This study uses the newly available financial literacy data, instead of proxies, from the Survey of
Consumer Finances to assess the role of objective and subjective financial literacy on the stock market
participation puzzle. Recognizing that the actual and perceived financial literacy may affect financial
decisions through different mechanisms, this study examines the effects that the discrepancy between
objective and subjective financial literacy has on directly-held and indirectly-held stock investment. We control for demographic characteristics and financial factors and find that objective literacy has more power to predict stock market participation, while subjective financial literacy only has a marginally significant impact on directly-held stock holdings.