The low participation of retail investors in the equity market is a concern for many countries. It is a necessary condition for the development of capital markets in Europe and a key factor for funding post-Covid economic recovery.
Recently, savers’
appetites for responsible investment has grown, but little is known
about the consequences of this development on individual investment
decisions.
Employee savings plans constitute a unique
laboratory for studying these choices. In a recent research article
(Brière and Ramelli, 2021), the impact of introducing responsible funds
into the investment choices of more than 900,000 French employees was
analysed. The addition of a responsible option to the menu of funds led
to a 7% increase in the equity allocation of new investments. Given that
the average equity allocation is around 13%, this increase is
substantial and represents an encouraging result for retail investors’
participation in the equity market. The role of social preferences
further explains this phenomenon.
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