Neighbors Matter: Causal Community Effects and Stock Market Participation / Jeffrey R. Brown, Zoran Ivkovich, Paul A. Smith, Scott Weisbenner.

Format:

Book

Author/Creator:

Brown, Jeffrey R.

Contributor:

National Bureau of Economic Research.

Ivkovich, Zoran.

Smith, Paul A.

Weisbenner, Scott.

Series:

Working Paper Series (National Bureau of Economic Research) no. w13168.

NBER working paper series no. w13168

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Neighbors Matter

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2007.

Summary:

This paper establishes a causal relation between an individual's decision of whether to own stocks and average stock market participation decision of the individual's community. We instrument for the average ownership of an individual's community with lagged average ownership of the states in which one's non-native neighbors were born. Combining this instrumental variables approach with controls for individual and community fixed effects, a broad set of time-varying individual and community controls, and state-by-year effects, rules out alternative explanations. To further establish that word-of-mouth communication drives this causal effect, we show that the results are stronger in more sociable communities.

Notes:

Print version record

June 2007.