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Stock Market Participation and the Internet

Author

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  • Bogan, Vicki

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 2.5 more mean years of education.

Suggested Citation

  • Bogan, Vicki, 2006. "Stock Market Participation and the Internet," Working Papers 127044, Cornell University, Department of Applied Economics and Management.
  • Handle: RePEc:ags:cudawp:127044
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    File URL: http://purl.umn.edu/127044
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    References listed on IDEAS

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    1. Freund, Caroline L. & Weinhold, Diana, 2004. "The effect of the Internet on international trade," Journal of International Economics, Elsevier, vol. 62(1), pages 171-189, January.
    2. Peress, Joel, 2005. "Information vs. Entry Costs: What Explains U.S. Stock Market Evolution?," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 40(03), pages 563-594, September.
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    Cited by:

    1. Christelis, Dimitris & Jappelli, Tullio & Padula, Mario, 2010. "Cognitive abilities and portfolio choice," European Economic Review, Elsevier, vol. 54(1), pages 18-38, January.
    2. Luc Arrondel & Hector Calvo Pardo & Xisco Oliver, 2007. "Temperant portfolio choice and background risk: evidence from France," Working Papers halshs-00588069, HAL.
    3. Luc Arrondel & Hector Calvo Pardo & Xisco Oliver, 2010. "Temperance in Stock Market Participation: Evidence from France," Economica, London School of Economics and Political Science, vol. 77(306), pages 314-333, April.
    4. Murillo Campello & John Graham, 2007. "Do Stock Prices Influence Corporate Decisions? Evidence from the Technology Bubble," NBER Working Papers 13640, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    Public Economics; D14; G10;

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)

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