Broadband Internet and the Stock Market Investments of Individual Investors

Hans Hvide; Tom Melding; Magne Mogstad; Ola Vestad

doi:10.1111/jofi.13335

Broadband Internet and the Stock Market Investments of Individual Investors

Hans Hvide^* (Corresponding Author)
, Tom Melding
, Magne Mogstad
, Ola Vestad

^*Corresponding author for this work

Economics

Research output: Contribution to journal › Article › peer-review

19 Citations (Scopus)

2 Downloads (Pure)

Abstract

We study the effects of broadband internet use on the investment decisions 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 tilt their portfolios toward funds, thereby obtaining more diversified portfolios and higher Sharpe ratios, and do not increase their trading activity in stocks. Overall, access to high-speed internet spurs a “democratization of finance,” with individuals making investment decisions that are more in line with the advice from portfolio theory.

Original language	English
Pages (from-to)	2163-2194
Number of pages	32
Journal	The Journal of Finance
Volume	79
Issue number	3
Early online date	17 Apr 2024
DOIs	https://doi.org/10.1111/jofi.13335
Publication status	Published - Jun 2024

Funding

This work has received financial support from the Norwegian Research Council, Grant numbers 250215 (Finansmarkedsfondet) and 295901

Funders	Funder number
Norwegian Research Council	250215, 295901

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10.1111/jofi.13335Licence: CC BY

Hvide_etal_JoF_Broadband_Internet_and_VOR
This is an open access article under the terms of the Creative Commons Attribution License, which permits use, distribution and reproduction in any medium, provided the original work is properly cited.
Final published version, 695 KBLicence: CC BY

Cite this

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Broadband Internet and the Stock Market Investments of Individual Investors

Abstract

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