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Digital divide and household portfolio investment efficiency: Evidence from China

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  • Chai, Shijun
  • Chen, Yang
  • Lim, King Yoong

Abstract

This study examines the impact of the digital divide (DD) on household portfolio investment efficiency in China, both before and after the COVID-19 pandemic, using a combination of technology foresight (TF) analysis and standard econometric analysis based on integrated Chinese household level data that combines the pre-pandemic (2019) and post-pandemic (2021) waves. The former is a novel technique that we propose, which demonstrates how, amidst an uncertain economic shock but with temporarily non-availability of data, a combination of conditional expectation based evaluation and scenario analyses can inform potential changes in the relationship between DD and portfolio investment efficiency. The foresight analysis based results are indeed, verified by actual post-pandemic household-level data based econometric evidence. Specifically, we hypothesized: (1) DD constraints portfolio investment efficiency via greater transaction costs, higher information asymmetry and sub-optimal asset allocation; and (2) the pandemic has amplified these adverse effects. Both techniques found consistent results that DD significantly hinders efficient asset allocation, confirming the usefulness of our TF framework in effectively anticipating post-pandemic investment patterns. These findings underscore the critical role of digital inclusion in financial decision-making and highlight the utility of using ex-ante information-based TF framework in analyzing micro-level financial behavior in response to future shocks.

Suggested Citation

  • Chai, Shijun & Chen, Yang & Lim, King Yoong, 2026. "Digital divide and household portfolio investment efficiency: Evidence from China," Emerging Markets Review, Elsevier, vol. 70(C).
    • Handle: RePEc:eee:ememar:v:70:y:2026:i:c:s1566014125001566
    DOI: 10.1016/j.ememar.2025.101407
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    JEL classification:

    • G50 - Financial Economics - - Household Finance - - - General
    • G59 - Financial Economics - - Household Finance - - - Other

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