Digital wealth management and consumption: Micro evidence from individual investments

Qiang Gong, Mingyuan Ban, Yunjun Yu, Luying Wang and Yan Yuan

China Economic Review, 2023, vol. 81, issue C

Abstract: With the rapid advancement of digital finance in China, accessing wealth management services through digital platforms has become considerably convenient. However, the potential impact of digital platform investments on residents' consumption remains a relatively unexplored question. This study addresses this gap by leveraging a unique dataset obtained from one of China's largest fintech companies, encompassing individual-level data on consumption and investment. Our findings indicate that engaging in digital platform investments can indeed stimulate residents' consumption. Importantly, participation in digital platform investment has an inclusive effect, with a more pronounced marginal impact on consumption among low-income residents and individuals residing in finance-underdeveloped cities. Additionally, the positive influence of digital platform investment on consumption primarily stems from two channels, the wealth effect resulting from investment returns and from investment diversification in a diverse range of wealth management products. The wealth effect is more pronounced among low-risk investments when risk diversification is limited, while more pronounced among high-risk investments when the portfolio is diversified.

Keywords: Digital finance; Digital wealth management; Financial inclusiveness (search for similar items in EconPapers)
JEL-codes: D12 D14 E21 G51 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:chieco:v:81:y:2023:i:c:s1043951x23001074

DOI: 10.1016/j.chieco.2023.102022

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