People who lose a parent during childhood are significantly less likely to invest in the stock market later in life, according to new research by Durham University Business School and King's Business School.

The researchers, however, also found that this pattern only holds in cultures that emphasise independence over community, whilst in more collectivist countries, this link is less likely to be seen.

This study was conducted by Louis Nguyen, Professor of Finance at Durham University Business School, alongside Yibing Wang and Tarik Driouchi, both Professors at King’s Business School, who wanted to explore how early-life trauma interacts with national culture to shape long-term financial decisions.

Using nationally representative household survey data from the US, China, South Korea, England, 21 European countries and Israel, the researchers show that the emotional and financial effects of losing a parent can persist into adulthood, influencing people’s willingness to take financial risks.

Early parental loss in individualistic cultures – like the United States and the UK - is strongly linked to lower levels of stock market participation. Whilst this relationship is far weaker in collectivistic societies – like China and South Korea –, where in-group financial and emotional support is more prevalent and culturally reinforced.

This difference, the researchers argue, stems from two cultural mechanisms. First, individuals in collectivistic countries like China are more likely to receive financial support from family and community after an early loss — a ‘cushion’ that reduces risk aversion.

Second, people in individualistic cultures like the US are more sensitive to trauma and more likely to internalise distress, leading to long-term caution in financial decisions.

“Stock market participation is more than just a personal finance choice — it shapes household welfare, capital allocation, and long-term economic growth,” explains. “Our findings show that culture fundamentally influences how personal experiences like bereavement translate into financial behaviour and economic engagement.”

The study also notes that lower stock market participation has wider socioeconomic implications. Stock ownership contributes to household welfare, firm financing, and long-term economic growth. A deeper understanding of how trauma and culture interact, the researchers say, could help policymakers design better support systems.

They suggest that survivor benefits, child welfare programmes, and trauma-informed interventions could help reduce the long-term effects of early bereavement — and promote greater financial inclusion in societies where individuals are expected to bear hardship alone.