Broadband Internet and the Stock Market Investments of Individual Investors

54 Pages Posted: 13 Jan 2021

See all articles by Hans K. Hvide

Hans K. Hvide

University of Bergen - Department of Economics; University of Aberdeen - Business School; Centre for Economic Policy Research (CEPR); Institute for the Study of Labor (IZA)

Tom Meling

University of Bergen; University of Chicago

Magne Mogstad

University of Chicago

Ola L. Vestad

Statistics Norway

Date Written: December 18, 2020

Abstract

We study the effects of broadband internet use on the portfolio selection of individual investors. A public program in Norway provides plausibly exogenous variation in internet use. Our instrumental variables estimates show that internet use causes a substantial increase in stock market participation, driven primarily by increased fund ownership. Existing investors increase the fraction of their portfolios held in funds and do not increase their trading activity in stocks. Access to fast internet seems to induce individual investors to make better financial decisions and hence leads to a "democratization of finance".

Keywords: equity market participation, investor welfare, portfolio selection, stock market participation

JEL Classification: D83, G11, J2

Suggested Citation

Hvide, Hans and Meling, Tom and Mogstad, Magne and Vestad, Ola L., Broadband Internet and the Stock Market Investments of Individual Investors (December 18, 2020). Available at SSRN: https://ssrn.com/abstract=3751721 or http://dx.doi.org/10.2139/ssrn.3751721

Hans Hvide (Contact Author)

University of Bergen - Department of Economics ( email )

Fosswinckelsgt. 6
N-5007 Bergen, 5007
Norway

University of Aberdeen - Business School ( email )

Edward Wright Building
Dunbar Street
Aberdeen, Scotland AB24 3QY
United Kingdom

HOME PAGE: http://hans.hvide.googlepages.com/

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Institute for the Study of Labor (IZA) ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Tom Meling

University of Bergen ( email )

Fosswinckelsgt. 6
Bergen, N-5007
Norway

HOME PAGE: http://https://sites.google.com/site/tomgrmeling/

University of Chicago ( email )

1101 East 58th Street
Chicago, IL 60637
United States

Magne Mogstad

University of Chicago ( email )

1101 East 58th Street
Chicago, IL 60637
United States

Ola L. Vestad

Statistics Norway ( email )

N-0033 Oslo
Norway

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