THE STOCKHOLDING PUZZLE IN ITALY: EVIDENCE FROM 2022 SURVEY DATA

Stock market participation remains surprisingly low despite its historically high returns, a phenomenon known as the stockholding puzzle. This study investigates the underlying reasons behind low stockholding rates among Italian households, using data from the 2022 Survey of Household Income and Wealth (SHIW). The analysis employs Ordinary Least Squares (OLS), Logit, and Survey-Weighted regression models to examine key determinants influencing stock ownership, including income, education, risk aversion, geographic location, employment status, and household size. The findings confirm that higher income and education levels significantly increase stockholding participation, while risk-averse individuals and those in Southern Italy are less likely to invest. Additionally, larger households exhibit lower participation rates, likely due to greater financial obligations. Interestingly, while wealthier individuals are more likely to hold stocks, risk aversion remains a significant barrier even among high-net-worth households. The results suggest that economic disparities, lack of financial literacy, and behavioral biases contribute to the persistence of the stockholding puzzle. Given these findings, the study proposes several policy interventions to increase stockholding participation, including financial literacy programs, incentives for low-income investors, reduced investment costs, and region-specific financial inclusion strategies. These measures aim to promote financial inclusion, reduce wealth inequality, and foster economic growth in Italy. This research contributes to the broader literature on household finance by highlighting the structural and behavioral barriers to stock market participation, offering valuable insights for policymakers, financial institutions, and researchers. Addressing these challenges is crucial to ensuring that more households can benefit from capital market growth, ultimately strengthening Italy’s financial system and long-term economic stability.