Data analysis technology and inequality in capital costs

Keyun Wang, Fengmin Xu, Shihao Wang and Benchu Li

Economics Letters, 2024, vol. 237, issue C

Abstract: This paper studies how data analysis technology impacts inequality in capital costs (ICC). We build a noisy rational expectations model with data budget, data supply, and the heterogeneous marginal value of firms’ data. We find that the growth in data analysis technology exacerbates ICC by crowding out investors’ attention on the firm with a low marginal value of its data. The widening gap in the marginal value of data between different firms amplifies this crowding-out effect and further exacerbates ICC. Increasing investors’ data budget can effectively mitigate ICC when the marginal value of data exceeds the specific threshold.

Keywords: Data analysis technology; Data budget; Inequality in capital costs (search for similar items in EconPapers)
JEL-codes: D53 D63 G11 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0165176524001459
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:237:y:2024:i:c:s0165176524001459

DOI: 10.1016/j.econlet.2024.111662

Access Statistics for this article

Economics Letters is currently edited by Economics Letters Editorial Office

More articles in Economics Letters from Elsevier
Bibliographic data for series maintained by Catherine Liu ().