TY  - UNPD
A1  - Balakina, Olga
A1  - Bäckman, Claes
A1  - Parakhoniak, Anastasiia
T1  - Beyond connectivity: stock market participation in a network
N2  - What are the aggregate and distributional consequences of the relationship be-tween an individual’s social network and financial decisions? Motivated by several well-documented facts about the influence of social connections on financial decisions, we build and calibrate a model of stock market participation with a social network that emphasizes the interplay between connectivity and network structure. Since connections to informed agents help spread information, there is a pivotal role for factors that determine sorting among agents. An increase in the average number of connections raises the average participation rate, mostly due to richer agents. A higher degree of sorting benefits richer agents by creating clusters where information spreads more efficiently. We show empirical evidence consistent with the importance of connectivity and sorting. We discuss several new avenues for future research into the aggregate impact of peer effects in finance.
T3  - SAFE working paper - 416 
KW  - Social networks
KW  - Peer effects
KW  - Stock Market Participation
KW  - Connectivity
KW  - Homophily
Y1  - 2024
UR  - http://publikationen.ub.uni-frankfurt.de/frontdoor/index/index/docId/71564
UR  - https://nbn-resolving.org/urn:nbn:de:hebis:30:3-715640
UR  - https://ssrn.com/abstract=4763145
N1  - We gratefully acknowledge research support
from the Leibniz Institute for Financial Research SAFE.
PB  - SAFE
CY  - Frankfurt am Main
ER  -