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RESEARCH PRODUCT
Open It And They Will Come? The Impact of Fallen Barriers on Securities Market Participation
Damir Stijepicsubject
Market economyNatural experimentMarket depthExploitLiberalizationOrder (exchange)Ceteris paribusEconomicsFinancial literacyBond marketdescription
Various barriers may prevent people from entering a market. Will they participate in the market despite their inexperience once the barriers fall? I exploit the socalled German reunification experiment in order to assess the impact of removed market barriers on participation rates: While East Germans were deprived of the possibility to participate in capitalist securities markets before 1989, the reunification of Germany offered access to those markets. I estimate that a person is, ceteris paribus, by 25–30 percentage points less likely to participate over a 3–7 years horizon after being initially excluded from the securities market, suggesting a prominent role of financial experience in explaining securities holdings.
| year | journal | country | edition | language |
|---|---|---|---|---|
| 2017-01-01 | SSRN Electronic Journal |