Participation Constraints in the Stock Market: Evidence from Unexpected Inheritance Due to Sudden Death

摘要: We use a natural experiment to investigate the impact of participation constraints on individuals' decisions invest in stock market. Unexpected inheritance due sudden deaths results exogenous variation financial wealth and allows us examine whether fixed entry ongoing costs cause non-participation. have three key findings. First, windfall has positive effect participation. Second, majority households do not react sizeable windfalls by entering market, but hold substantial safe assets—even over longer horizons. Third, inheriting holdings actively sell entire portfolio. Overall, these findings suggest that many individuals is unlikely be constrained costs.