Decision-Making by Individual Investors in Japan: Verification Using a Binary Response Model with Survey Data

Purpose: In line with the government's initiative to shift “from savings to investment,” the small investment tax-free system (Nippon Individual Savings Account) was introduced in Japan in January 2014. This paper compares and analyzes the holding motivations of the old systems of “General NISA” and “Tsumitate (Accumulated) NISA” as of 2018 and 2023. Design/Methodology/Approach: The data used is from the Japan Securities Dealer-s Association’s “Survey on Attitudes of Individual Investors Regarding Securities Investment”. We estimated probability model using a probit model. Findings: For General NISA, the findings show that investment probability is an increasing function of age and is for entertainment purposes. It also complements stock investments and is an alternative to investment trusts. For Tsumitate NISA, investment probability is a decreasing function of age and an increasing function of living expenses during retirement. Therefore, long-term factors are thought to be strong. Additionally, it is considered a substitute for stock investments and a complement to investment trust. Furthermore, while financial literacy is an important factor for the General NISA, it is less important for the Tsumitate NISA. Practical Implications: This study examines the possibility that tax exemptions could promote stock investment in Japan. Expanding stock investment in Japan is a major challenge. Originality/Value: The analysis is conducted using survey data from 5,000 people in Japan.