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

Zhiqiang Lu, Junjie Wu, Hongyu Li and Brian Galloway

Economic Systems, 2024, vol. 48, issue 1

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.

Keywords: Digital financing platforms; Financial awareness; Information cost; Internet wealth management products; Stock market participation (search for similar items in EconPapers)
JEL-codes: G11 G21 G23 G28 G51 H24 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecosys:v:48:y:2024:i:1:s0939362523000870

DOI: 10.1016/j.ecosys.2023.101148

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