Trust, financial literacy and financial market participation: evidence from EU
DOI:
https://doi.org/10.3846/bm.2026.2371Abstract
The impact of trust and financial literacy on financial market participation is well-proven across research, but these studies are mostly focused on isolated effects of both characteristics, but not interactions. Moreover, there is a lack of comprehensive studies on this area from the perspective of the European households. This analysis examines the impact of trust and its interactions with subjective and objective financial literacy on financial market participation of individuals in the European Union. The data originates from the Flash Eurobarometer 525 study on financial literacy across individuals in the EU – data collection was conducted in 2023. The study finds that (i) trust to financial institutions, used as a proxy of general trust, positively affects financial market participation, and (ii) subjective financial literacy negatively affects this impact of trust. These results are robust across models and subsets. On the other hand, the interaction analysis of trust and objective financial literacy provides ambiguous results and may require further studies.
Keywords:
financial market participation, trust, financial literacy, household financeHow to Cite
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