23 Mar 2021

Can responsible investing encourage retail investors to invest in equities?

Marie Brière / Stefano Ramelli

0
Download Publication

2883 Downloads

The low participation of retail investors in the equity market is a concern for many countries. It is a necessary condition for the development of capital markets in Europe and a key factor for funding post-Covid economic recovery. Recently, savers’ appetites for responsible investment has grown, but little is known about the consequences of this development on individual investment decisions.

Employee savings plans constitute a unique laboratory for studying these choices. In a recent research article (Brière and Ramelli, 2021), the impact of introducing responsible funds into the investment choices of more than 900,000 French employees was analysed. The addition of a responsible option to the menu of funds led to a 7% increase in the equity allocation of new investments. Given that the average equity allocation is around 13%, this increase is substantial and represents an encouraging result for retail investors’ participation in the equity market. The role of social preferences further explains this phenomenon.

Related Publications

Browse through the list of related publications.