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Digital finance and stock market participation: The case of internet wealth management products in China

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  • Lu, Zhiqiang
  • Wu, Junjie
  • Li, Hongyu
  • Galloway, Brian

Abstract

Digital financing platforms have enhanced accessibility for households that wish to invest in wealth management products, but their impact on stock market participation remains underexplored in the literature. This paper investigates the effect of internet wealth management products on the household propensity to invest and participate in the stock market, using the microlevel dataset from the China Household Finance Survey, which covers 40,011 households. Our findings reveal that purchasing internet wealth management products positively and significantly influences the household inclination to invest and stock market participation level. Moreover, households with internet wealth management products have higher financial awareness and heightened interest in financial news. These characteristics not only reduce information costs but also promote stock market participation. Furthermore, the impact of purchasing internet wealth management products on stock market participation is more pronounced among households with higher education and lower income risk and residence in regions with a more developed financial market.

Suggested Citation

  • Lu, Zhiqiang & Wu, Junjie & Li, Hongyu & Galloway, Brian, 2024. "Digital finance and stock market participation: The case of internet wealth management products in China," Economic Systems, Elsevier, vol. 48(1).
    • Handle: RePEc:eee:ecosys:v:48:y:2024:i:1:s0939362523000870
    DOI: 10.1016/j.ecosys.2023.101148
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    More about this item

    Keywords

    Digital financing platforms; Financial awareness; Information cost; Internet wealth management products; Stock market participation;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies

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