Rethinking the Stock Market Participation Puzzle: A Qualitative Approach

We revisit the ongoing limited stock market participation puzzle leveraging a qualitative research approach that is commonly used in many social sciences, but much less so in finance or economics. In December 2021, we conduct open-ended in-depth interviews of 25 stock market participants and non-participants in Germany, a high-income country with a stock market participation rate of less than 20%. We analyze the interviews to substantiate, extend, and modify our understanding of factors contributing to stock market participation. Non-investors perceive non-monetary entry and participation costs to be surprisingly high. Investors agree that investing in the stock market is complex and time-consuming, but differently from non-investors, investors find a way to overcome these costs with the help of family, friends, or financial advisors they trust.