Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/240589 
Authors: 
Year of Publication: 
2021
Series/Report no.: 
Working Papers of the Priority Programme 1859 "Experience and Expectation. Historical Foundations of Economic Behaviour" No. 32
Publisher: 
Humboldt University Berlin, Berlin
Abstract: 
Do memories of highly emotional stock market crashes permanently affect the investment decisions of households? The Initial Public Offerings of Deutsche Telekom during 1996- 2000 provide an optimal base to address this question, as it is known for its emotional character and is reputedly "the last time Germans invested in stocks." Using Socio-Economic Panel (SOEP) household survey data, I show that having experienced this event leads to persistently lower stock market participation in the future. In addition, this effect is greater for households that had directly invested in Telekom shares, those being more likely to have high emotional experiences. Finally, I also show that such traumatic experiences on investment decisions have intergenerational consequences, significantly affecting how the next generation invests in the financial market.
Subjects: 
Household finance
stock market participation
financial crises
JEL: 
D14
G01
G11
E21
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

Files in This Item:
File
Size
779.11 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.