Prior literature has examined minority stock market participation and found that it increased rapidly throughout the 1990’s and into the early 2000’s. However, in 2004 after stock prices had suffered decline, Black and Hispanic market participation fell off sharply. This paper uses the NLSY 79 a panel data set to examine whether the diminished likelihood of Black and Hispanic 2004 market participation is due to race or variation in cognitive ability and investor experience. We find that IQ and investor experience subsume all racial effects in the likelihood of 2004 market participation.
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Loving, A.C., Finke, M.S. & Salter, J.R. Explaining the 2004 Decrease in Minority Stock Ownership. Rev Black Polit Econ 39, 403–425 (2012). https://doi.org/10.1007/s12114-012-9132-8