Broadband internet and stock market participation |
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| Institution: | 1. Research Institute of Economics and Management, Southwestern University of Finance and Economics, Chengdu, Sichuan 610074, China;2. Department of Finance, School of Economics and Management, Wuhan University, Wuhan, Hubei 430072, China;3. Hubei University of Economics, Wuhan, Hubei 430205, China;1. Department of Finance, School of Business, Hohai University, China;2. Department of Management Science and Engineering, School of Business, Hohai University, China;1. School of Accounting, Fujian Jiangxia University, China;2. King''s Business School, King''s College London, United Kingdom;3. UIBE Business School, University of International Business and Economics, China;4. Management College, Beijing Union University, China;1. School of Finance, Zhejiang University of Finance and Economics, Hangzhou, China;2. Financial Innovation and Inclusive Finance Research Center, Zhejiang University of Finance and Economics, Hangzhou, China;1. School of Economics and Management, Nanchang University, Nanchang, China;2. Department of Finance, National Central University, Taoyuan, Taiwan |
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| Abstract: | This paper examines the effect of broadband Internet on household stock market participation. By exploiting the expansion of broadband in the U.S. from 1999 to 2008, we find that the availability of broadband in a household's zip code significantly increases the likelihood of stockholding and the share of wealth invested in stocks. Moreover, this effect operates through a higher tendency to follow the stock market, indicating that broadband access reduces the information cost associated with stockholding. The effect of broadband access concentrates among people with high socioeconomic status. By contrast, the arrival of broadband has little impact on the portfolio choice and stock market following of people with low socioeconomic status, who most need to improve wealth accumulation. Our study sheds light on the role of technology development in household finance and the potential distributional effect of technology diffusion. |
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