The medium is the message: Learning channels, financial literacy, and stock market participation

This paper investigates the effects of learning channels on stock market participation. More specifically, we investigate the direct effects of learning about financial matters from one's private network, financial advisors, and the media, as well as the moderating effects of financial literacy on the relationship between learning from these channels and stock market participation. Analyzing a unique cross-section data that combine survey data and bank register data on individual retail investors, we find that media is the only learning channel that increases the likelihood of owning stocks and the portfolio share invested in stocks. We also find that financial literacy has a significant moderating effect: Interactions point to the joint importance of learning from media and financial literacy for individuals' stock market participation. Our findings suggest implications to policymakers when designing financial education programs.