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Does the Internet Increase Trading? Evidence from Investor Behavior in 401(k) PlansJames J. ChoiYale School of Management; National Bureau of Economic Research (NBER) David LaibsonHarvard University - Department of Economics; National Bureau of Economic Research (NBER) Andrew MetrickYale School of Management; National Bureau of Economic Research (NBER) July 2000 Abstract: We analyze the impact of a Web-based trading channel on the trading activity in two corporate 401(k) plans. Using detailed data on about 100,000 participants, we compare trading growth in these firms to growth for a sample of firms without a Web channel. After 18 months of access, the inferred Web effect is very large: trading frequency doubles, and portfolio turnover rises by over 50 percent. We also document several patterns of Web-trading behavior. Young, male, and wealthy participants are more likely to try the Web channel. Frequent traders (before Web introduction) are less likely to try the Web. Participants who try the Web tend to stick with it. Web trades tend to be smaller than phone trades both in dollars and as a fraction of portfolio. "Short-term" trades make up a higher proportion of phone trades than of Web trades.
Number of Pages in PDF File: 47 JEL Classification: D0, G0, L0, O0 working papers seriesDate posted: September 20, 2000Suggested CitationContact Information
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