Hostname: page-component-84b7d79bbc-7nlkj Total loading time: 0 Render date: 2024-07-31T08:39:03.387Z Has data issue: false hasContentIssue false
  • English
  • Français

Stock Market Participation and the Internet

Published online by Cambridge University Press:  06 April 2009

Vicki Bogan
Vicki Bogan
Affiliation:
vlb23@cornell.edu, Department of Applied Economics and Management, Cornell University, 454 Warren Hall, Ithaca, NY 14853
Get access Rights & Permissions [Opens in a new window]

Abstract

Theory indicates that frictions (e. g., information and transaction costs) could account for the lower than expected stock market participation rates. This paper examines the hypothesis that there has been a fundamental change in participation and links this change to the reduction of these frictions by the advent of the Internet. Using panel data on household participation rates over the past decade, the results show computer/Internet using households raised participation substantially more than non-computer using households. The increased probability of participation was equivalent to having over $27,000 in additional household income or over two more mean years of education.

Type
Research Article
Information
Journal of Financial and Quantitative Analysis , Volume 43 , Issue 1 , March 2008 , pp. 191 - 211
Copyright
Copyright © School of Business Administration, University of Washington 2008

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Blume, M., and Zeldes, S.. “Household Stockownership Patterns and Aggregate Asset Pricing Theories”. Working Paper, University of Pennsylvania (1994).Google Scholar
Choi, J.; Laibson, D.; and Metrick, A.. “Does the Internet Increase Trading? Evidence From Investor Behavior in 401K Plans”. Journal of Financial Economics, 64 (2002), 397–421.CrossRefGoogle Scholar
Cochrane, J. Asset Pricing. Princeton, NJ: Princeton University Press (2001).Google Scholar
Freund, C., and Weinhold, D.. “On the Effect of the Internet on International Trade”. Discussion Paper 693, Board of Governors of the Federal Reserve System (2000).Google Scholar
Goolsbee, A“In a World without Borders: The Impact of Taxes on Internet Commerce”. Quarterly Journal of Economics, 115 (2000), 561–576.CrossRefGoogle Scholar
Goolsbee, A, and Chevalier, J.. “Measuring Prices and Price Competition Online: Amazon and Barnes & Noble”. Quantitative Marketing and Economics, 1 (2003), 203–222.Google Scholar
Goss, E. “The Internet's Contribution to U. S. Productivity Growth”. Business Economics, 36 (2001), 32–42.Google Scholar
Guiso, L; Haliassos, M.; and Jappelli, T.. Equity Culture: Theory and Cross-Country Evidence”. Economic Policy, (2003), 123–170.CrossRefGoogle Scholar
Haliassos, M., and Bertaut, C.. “Why Do So Few Hold Stocks?” Economic Journal, 105 (1995), 1110–1129.CrossRefGoogle Scholar
Hansen, L., and Jagannathan, R.. “Implications of Security Market Data For Models of Dynamic Economies”. Journal of Political Economy, 99 (1991), 225–262.CrossRefGoogle Scholar
He, H., and Modest, D.. “Market Frictions and Consumption-Based Asset Pricing”. Journal of Political Economy, 103 (1995), 94–117.CrossRefGoogle Scholar
Hong, H.; Kubik, J.; and Stein, J.. “Social Interaction and Stock Market Participation”. Journal of Finance, 59 (2004), 137–163.CrossRefGoogle Scholar
Lal, R., and Sarvary, M.. “When and How is the Internet Likely to Decrease Price Competition?” Marketing Science, 18 (1999), 485–503.CrossRefGoogle Scholar
Luttmer, E. “Asset Pricing in Economies with Frictions“. Econometrica, 64 (1996), 1439–1467.CrossRefGoogle Scholar
Luttmer, E. “What Level of Fixed Costs Can Reconcile Consumption and Stock Returns?” Journal of Political Economy, 107 (1999), 969–997.CrossRefGoogle Scholar
Mankiw, N., and Zeldes, S.. “The Consumption of Stockholders and Non-Stockholders”. Journal of Financial Economics, 29 (1991), 97–112.CrossRefGoogle Scholar
Mehra, R., and Prescott, E.. “The Equity Premium: A Puzzle”. Journal of Monetary Economics, 15 (1985), 145–161.CrossRefGoogle Scholar
Peress, J.“Information versus Entry Costs: What Explains U. S. Stock Market Evolution?” Journal of Financial and Quantitative Analysis, 40 (2005), 563–594.CrossRefGoogle Scholar
Press, S.Bayesian Statistics: Principles, Models, and Applications. New York: John Wiley and Sons (1989).Google Scholar
Vissing-Jørgensen, A. “Limited Stock Market Participation”. Working Paper, Massachusetts Institute of Technology (1997).Google Scholar