We show that personal experiences and quality of life under communism exert a lasting influence on individuals' moral assessment of capital markets and on their stock-market participation. Utilizing novel German brokerage, bank, and survey data, we document that, decades after Germany's reunification in 1990, East Germans invest significantly less in stocks and hold more negative views on capital markets. The effect varies by the length and intensity of exposure to communist ideology. Moreover, results are strongest for individuals who experienced life in the GDR positively, e.g., because of local Olympic champions or living in a "showcase city". Results reverse for East Germans with negative experiences, e.g., due to suffering religious oppression, environmental pollution, or lack of access to Western TV entertainment.
forthcoming in The Journal of Finance
