Broadband Internet and Stock Market Participation

Posted: 2 Apr 2021

See all articles by Yang Zhou

Yang Zhou

Wuhan University - School of Economics and Management

Weijie Lu

Wuhan University - School of Economics and Management

Geng Niu

Southwestern University of Finance and Economics

Date Written: March 14, 2021

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. Our study speaks to the role of technology development in household finance.

Keywords: Broadband Internet, Stock market participation, Household finance, Digital divide, Technology diffusion

JEL Classification: G50, G11, D14, D8

Suggested Citation

Zhou, Yang and Lu, Weijie and Niu, Geng, Broadband Internet and Stock Market Participation (March 14, 2021). Available at SSRN: https://ssrn.com/abstract=3804465

Yang Zhou

Wuhan University - School of Economics and Management ( email )

Wu Han, Hu-Bai 430072
China

Weijie Lu (Contact Author)

Wuhan University - School of Economics and Management ( email )

Wuhan
China

Geng Niu

Southwestern University of Finance and Economics ( email )

55 Guanghuacun Street
Chengdu, Sichuan 610074
China

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