Windfall gains and stock market participation: Evidence from shopping receipt lottery

IF 3.6 2区经济学 Q1 BUSINESS, FINANCE

Journal of Banking & Finance Pub Date : 2025-01-08 DOI:10.1016/j.jbankfin.2024.107378

Tzu-Chang Forrest Cheng , Hsuan-Hua Huang , Tse-Chun Lin , Tzu-Ting Yang , Jian-Da Zhu

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Abstract

This paper utilizes receipt lotteries in Taiwan, along with comprehensive administrative data, to examine the effect of cash windfalls on stock market participation and portfolio diversification, which can help us understand whether wealth levels serve as the explanation for the limited participation and under-diversification puzzles in stock markets. The results indicate that each million TWD (approximately 33,000 USD) windfall gain from winning receipt lotteries increases the probability of stock market participation by 1.09 percentage points. This effect is primarily driven by individuals who were not participating in the stock market prior to winning. For existing participants, each million TWD windfall increases the total value of stocks by 142,552 TWD, attributed to both an increase in their number of shares and higher average prices of the stocks they hold. Additionally, we find that individuals do not significantly diversify their portfolios after winning the lottery, suggesting that wealth level is not the primary reason for under-diversification.

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来源期刊

Journal of Banking & Finance Multiple-

CiteScore

6.40

自引率

5.40%

发文量

262

期刊介绍： The Journal of Banking and Finance (JBF) publishes theoretical and empirical research papers spanning all the major research fields in finance and banking. The aim of the Journal of Banking and Finance is to provide an outlet for the increasing flow of scholarly research concerning financial institutions and the money and capital markets within which they function. The Journal''s emphasis is on theoretical developments and their implementation, empirical, applied, and policy-oriented research in banking and other domestic and international financial institutions and markets. The Journal''s purpose is to improve communications between, and within, the academic and other research communities and policymakers and operational decision makers at financial institutions - private and public, national and international, and their regulators. The Journal is one of the largest Finance journals, with approximately 1500 new submissions per year, mainly in the following areas: Asset Management; Asset Pricing; Banking (Efficiency, Regulation, Risk Management, Solvency); Behavioural Finance; Capital Structure; Corporate Finance; Corporate Governance; Derivative Pricing and Hedging; Distribution Forecasting with Financial Applications; Entrepreneurial Finance; Empirical Finance; Financial Economics; Financial Markets (Alternative, Bonds, Currency, Commodity, Derivatives, Equity, Energy, Real Estate); FinTech; Fund Management; General Equilibrium Models; High-Frequency Trading; Intermediation; International Finance; Hedge Funds; Investments; Liquidity; Market Efficiency; Market Microstructure; Mergers and Acquisitions; Networks; Performance Analysis; Political Risk; Portfolio Optimization; Regulation of Financial Markets and Institutions; Risk Management and Analysis; Systemic Risk; Term Structure Models; Venture Capital.