Windfall Gains and Stock Market Participation : Evidence from Shopping Receipt Lottery

We utilize shopping receipt lotteries that almost every shopper participates in and complete administrative data in Taiwan to examine the effect of cash windfalls on stock market participation. The advantage of using receipt lottery winning is its immunity from the sampling biases that may limit the external validity and policy implications as the citizens in Taiwan receives one receipt lottery ticket per transaction. We find that each million TWD (around 35,000 USD) windfall gain from winning the receipt lottery increases the stock market participation probability by around 0.76 percentage points, around 4.34% of the average level. Windfall gain also increases the number and value of shares the receipt lottery winner hold in the subsequent year. The effect is stronger among winners that are younger, without kids, and with lower financial wealth. Our results suggest that financial constraints may still be a potential barrier to stock market participation