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| Type | Master's Thesis |
| Scope | Discipline-based scholarship |
| Title | Can the Moral Impact of Sustainable and Responsible Investments Increase Stock Market Participation? |
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| Institution | University of Zurich |
| Faculty | Faculty of Business, Economics and Informatics |
| Number of Pages | 44 |
| Date | 2020 |
| Zusammenfassung | Despite the financial attractiveness of diversified stock investments in the long run, the share of households participating directly in the stock market is known to be puzzlingly low globally. The literature around this puzzle suggests that an individual’s negative perception on the morality of the stock market is, among other factors, a reason for why individuals are deterred from investing in equity. On that matter, the recent developments in financial markets offer a potential antidote. The growing demand for sustainable and responsible investments (SRI)is recognized for its morally positive influence on society, environment and economy. Hence the question, does the moral impact of sustainable and re-sponsible investments (SRI) increase stock market participation. Answering this question constitutes the primary contribution of this thesis to the still widely unexplored field of methods to effectively increase stock market participation. Furthermore, an answer would offer practical insights on how SRI could play a role to attract especially younger customers, as long-term sustainable equity investments can be effective countermeasures to an uncertain future retirement income and threatening impacts from cli-mate change. In order to provide an answer, the thesis sets up an experimental framework with hypotheses based on a literature review of the puzzle-related negative moral attitude toward the stock market as well as a review of SRI and its moral impact. Together with additional relevant studies an asset allocation exper-iment is developed. The incentivized computer experiment aims to examine how participants invest a given endowment among four investment options (a savings account, a government bond, a stock index ETF and a sustainable fund) in a long-term scenario of ten years and how they alter this decision when treated with additional information influencing their moral perception of the stock market. One treatment comprises the main information in the form of a narrative with a short clip about SRI and its moral impact (SRI treatment). The second treatment is added as a more general treatment to allow comparisons and explains, in the form of a short video, the underlying factors of long-term stock investing and depicts how long horizon returns of ten plus years are unlikely to be negative (LHR treatment). Consequently, the differences between the initial endowment allocation and the post treatment decisions constitute the treatment effects. The main prediction hypothesized is that after that SRI treatment the amount invested in the stock market is going be greater. Furthermore, after the same treatment a larger amount invested in the SRI option is predicted. Finally, individuals with a stronger negative moral attitude toward the stock market as well as a more risk-averse attitude are anticipated to invest more in the SRI option after learning about the moral impact. |
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