Broadband Internet and Stock Market Participation
Posted: 2 Apr 2021
Date Written: March 14, 2021
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: Suggested Citation