Which are the psychological predictors of stock market participation?

Classical economic theories describe investors as rational individuals who base their decisions solely on expected returns and profit maximization. Behavioral sciences, however, have largely demonstrated that psychological, emotional, and motivational factors influence financial decision-making. In this framework, our study, held in partnership with the Italian fintech Flowe, aimed to find the psychological predictors of stock market participation. Analysing survey data on a sample of 1153 individuals (M=577, F=576; age range 18-50), we measured the impact of socio-demographic characters, financial literacy, financial self-efficacy, impulsivity, risk attitude and future orientation on the decision to invest. Findings from a Logistic Regression Model (Nagelkerke’s R2=.28; χ2(8)=268.36, p<.001) show that financial risk propensity and financial literacy – objective and perceived – significantly affect the probability of participating in the stock market. In addition, we observed a consistent role in investment related to gender gap and education level. These results suggest that financial decision-making processes are not merely guided by the pursuit of profit. Considering psychological factors (risk attitude, motivations, and values) is essential to understand investment decisions.