Editing Stock market (section)

==Market participant==
{{Globalize|section|US|date=November 2020}}
[[Market participant]]s include individual retail investors, [[institutional investor]]s (e.g., [[pension fund]]s, [[insurance companies]], [[mutual fund]]s, [[index fund]]s, [[exchange-traded fund]]s, [[hedge fund]]s, investor groups, banks and various other [[financial institution]]s), and also publicly traded corporations trading in their own shares. [[Robo-advisor]]s, which automate investment for individuals are also major participants.

=== Stock market participation post-2020 pandemic ===
In 2021, the value of world stock markets experienced an increase of 26.5%, amounting to US$22.3 trillion. Developing economies contributed US$9.9 trillion and developed economies US$12.4 trillion. Asia and Oceania accounted for 45%, Europe had 37%, and America had 16%, while Africa had 2% of the global market.<ref>{{Cite web |date=2011 |title=International Merchandise Trade Statistics: Concepts and Definitions 2010 |url=https://unstats.un.org/unsd/trade/eg-imts/IMTS%202010%20(English).pdf |website=United Nations Publication |place=New York |issue=E.10.XVII.13}}</ref>

=== Stock market participation factors ===
Factors such as high trading prices, market ratings, information about stock exchange dynamics, and financial institutions can influence individual and corporate participation in stock markets. Additionally, the appeal of stock ownership, driven by the potential for higher returns compared to other financial instruments, plays a crucial role in attracting individuals to invest in the stock market.

Regional and country-specific factors can also impact stock market participation rates. For example, in the United States, stock market participation rates vary widely across states, with regional factors potentially influencing these disparities. It is noted that individual participation costs alone cannot explain such large differences in participation rates from state to state, indicating the presence of other regional factors at play.<ref>{{Cite web |date=2024 |title=World Statistics Pocketbook |url=https://unstats.un.org/unsd/publications/pocketbook/ |website=UN Department of Economic and Social Affairs Statistics Division}}</ref>

Behavioral factors are recognized as significant influences on stock market participation, as evidenced by the low participation rates observed in the Ghanaian stock market.<ref>{{Cite journal |year=1990 |title=International Standard Industrial Classification Of All Economic Activities |url=https://unstats.un.org/unsd/classifications/Econ/Download/In%20Text/ISIC_Rev_3_English.pdf |journal=United Nations Statistical Papers |edition=3 |location=[[New York City|New York]] |publisher=[[United Nations]] |issue=4}}</ref>

Factors such as factor endowments, geography, political stability, [[Free trade|liberal trade policies]], foreign direct investment inflows, and domestic industrial capacity are also identified as important in determining participation.<ref>{{Cite journal |last1=Rydqvist |first1=Kristian |last2=Spizman |first2=Joshua D. |last3=Strebulaev |first3=Ilya A. |date=2011 |title=Government Policy and Ownership of Financial Assets |url=http://www.ssrn.com/abstract=1428442 |journal=SSRN Electronic Journal |language=en |doi=10.2139/ssrn.1428442 |issn=1556-5068}}</ref>

=== Demographics of market participation ===
==== Indirect vs. Direct Investment ====
Indirect investment involves owning shares indirectly, such as via a mutual fund or an exchange traded fund. Direct investment involves direct ownership of shares.<ref>{{cite web | url=https://investorjunkie.com/investing/direct-vs-indirect-shares/ | title=What's the Difference Between Direct and Indirect Shares? | date=August 14, 2018 | publisher=InvestorJunkie | access-date=December 7, 2019 | archive-date=April 14, 2021 | archive-url=https://web.archive.org/web/20210414160248/https://investorjunkie.com/investing/direct-vs-indirect-shares/ | url-status=live }}</ref>

Direct ownership of stock by individuals rose slightly from 17.8% in 1992 to 17.9% in 2007, with the median value of these holdings rising from $14,778 to $17,000.<ref name=":1">{{Cite report |date=September 1995 |title=Statistical Abstract of the United States: 1995 |url=https://www.census.gov/library/publications/1995/compendia/statab/115ed.html |publisher=United States Census Bureau |page=513 |access-date=2015-12-17 |archive-date=April 16, 2021 |archive-url=https://web.archive.org/web/20210416133352/https://www.census.gov/library/publications/1995/compendia/statab/115ed.html |url-status=live }}</ref><ref name=":0">{{Cite report |date=August 2011 |title=Statistical Abstract of the United States: 2012 |url=https://www.census.gov/library/publications/2011/compendia/statab/131ed.html?cssp=SERP |publisher=United States Census Bureau |page=730 |access-date=2015-12-17 |archive-date=April 17, 2021 |archive-url=https://web.archive.org/web/20210417122126/https://www.census.gov/library/publications/2011/compendia/statab/131ed.html?cssp=SERP |url-status=live }}</ref> Indirect participation in the form of retirement accounts rose from 39.3% in 1992 to 52.6% in 2007, with the median value of these accounts more than doubling from $22,000 to $45,000 in that time.<ref name=":1" /><ref name=":0" /> Rydqvist, Spizman, and [[Ilya Strebulaev|Strebulaev]] attribute the differential growth in direct and indirect holdings to differences in the way each are taxed in the United States. Investments in pension funds and 401ks, the two most common vehicles of indirect participation, are taxed only when funds are withdrawn from the accounts. Conversely, the money used to directly purchase stock is subject to taxation as are any dividends or capital gains they generate for the holder. In this way, the current tax code incentivizes individuals to invest indirectly.<ref>{{Cite journal | title=Government Policy and Ownership of Financial Assets | date=2013-01-01 | first1 = Kristian | last1=Rydqvist | first2=Joshua | last2=Spizman | first3=Ilya A. | last3=Strebulaev | doi=10.2139/ssrn.1428442 | ssrn=1428442| s2cid=154598793 | url=http://www.nber.org/papers/w17522.pdf }}</ref>

==== Participation by income and wealth strata ====
Rates of participation and the value of holdings differ significantly across strata of income. In the bottom quintile of income, 5.5% of households directly own stock and 10.7% hold stocks indirectly in the form of retirement accounts.<ref name=":0" /> The top decile of income has a direct participation rate of 47.5% and an indirect participation rate in the form of retirement accounts of 89.6%.<ref name=":0" /> The median value of directly owned stock in the bottom quintile of income is $4,000 and is $78,600 in the top decile of income as of 2007.<ref name=":2" /> The median value of indirectly held stock in the form of retirement accounts for the same two groups in the same year is $6,300 and $214,800 respectively.<ref name=":2">{{Cite report | title=Changes in U.S. Family Finances from 2007 to 2010: Evidence from the Survey of Consumer Finances | url=http://www.federalreserve.gov/pubs/bulletin/2012/pdf/scf12.pdf | publisher=Federal Reserve Board of Governors | page=24 | date=June 2012 | access-date=October 21, 2015 | archive-date=October 13, 2015 | archive-url=https://web.archive.org/web/20151013164007/http://www.federalreserve.gov/pubs/bulletin/2012/pdf/scf12.pdf | url-status=live }}</ref> Since the Great Recession of 2008 households in the bottom half of the [[income distribution]] have lessened their participation rate both directly and indirectly from 53.2% in 2007 to 48.8% in 2013, while over the same period households in the top decile of the income distribution slightly increased participation 91.7% to 92.1%.<ref name=":3">{{Cite report | date=September 2014 | title=Changes in U.S. Family Finances from 2010 to 2013: Evidence from the Survey of Consumer Finances | url=http://www.federalreserve.gov/pubs/bulletin/2014/pdf/scf14.pdf | publisher=Federal Reserve Board of Governors | page=20 | access-date=2015-12-17 | archive-date=November 2, 2015 | archive-url=https://web.archive.org/web/20151102234959/http://www.federalreserve.gov/pubs/bulletin/2014/pdf/scf14.pdf | url-status=live }}</ref> The mean value of direct and indirect holdings at the bottom half of the income distribution moved slightly downward from $53,800 in 2007 to $53,600 in 2013.<ref name=":3" /> In the top decile, mean value of all holdings fell from $982,000 to $969,300 in the same time.<ref name=":3" /> The mean value of all stock holdings across the entire income distribution is valued at $269,900 as of 2013.<ref name=":3" />

====Participation by race and gender====
The racial composition of stock market ownership shows households headed by whites are nearly four and six times as likely to directly own stocks than households headed by blacks and Hispanics respectively. As of 2011 the national rate of direct participation was 19.6%, for white households the participation rate was 24.5%, for black households it was 6.4% and for Hispanic households it was 4.3%. Indirect participation in the form of 401k ownership shows a similar pattern with a national participation rate of 42.1%, a rate of 46.4% for white households, 31.7% for black households, and 25.8% for Hispanic households. Households headed by married couples participated at rates above the national averages with 25.6% participating directly and 53.4% participating indirectly through a retirement account. 14.7% of households headed by men participated in the market directly and 33.4% owned stock through a retirement account. 12.6% of female-headed households directly owned stock and 28.7% owned stock indirectly.<ref name=":0" />

====Determinants and possible explanations of stock market participation====
In a 2003 paper by Vissing-Jørgensen attempts to explain disproportionate rates of participation along wealth and income groups as a function of fixed costs associated with investing. Her research concludes that a fixed cost of $200 per year is sufficient to explain why nearly half of all U.S. households do not participate in the market.<ref>{{Cite journal |first=Annette |last=Vissing-Jørgensen |title=Perspectives on Behavioral Finance: Does 'Irrationality' Disappear with Wealth? Evidence from Expectations and Actions |journal=NBER Macroeconomics Annual |volume=18 |year=2003 |pages=139–194 | doi=10.1086/ma.18.3585252 | citeseerx=10.1.1.195.7189 |s2cid=224798356 }}</ref> Participation rates have been shown to strongly correlate with education levels, promoting the hypothesis that information and transaction costs of market participation are better absorbed by more educated households. Behavioral economists Harrison Hong, Jeffrey Kubik and Jeremy Stein suggest that sociability and participation rates of communities have a statistically significant impact on an individual's decision to participate in the market. Their research indicates that social individuals living in states with higher than average participation rates are 5% more likely to participate than individuals that do not share those characteristics.<ref>{{Cite journal | title=Social Interaction and Stock-Market Participation | last=Hong | first=Harrison | date=February 2004 | journal=The Journal of Finance | volume=59 | pages=137–163 | doi=10.1111/j.1540-6261.2004.00629.x | url=https://surface.syr.edu/cgi/viewcontent.cgi?article=1060&context=ecn | access-date=September 24, 2019 | archive-date=August 8, 2020 | archive-url=https://web.archive.org/web/20200808005416/https://surface.syr.edu/cgi/viewcontent.cgi?article=1060&context=ecn | url-status=live }}</ref> This phenomenon also explained in cost terms. Knowledge of market functioning diffuses through communities and consequently lowers transaction costs associated with investing.