The role of internet in stock market participation: just a matter of habit?
Information Technology & People
ISSN: 0959-3845
Article publication date: 16 May 2018
Issue publication date: 23 May 2018
Abstract
Purpose
The purpose of this paper is to adopt a behavioural approach to explain how the internet use influences stock market participation (SMP) decisions.
Design/methodology/approach
Drawing on the literature on sociability and SMP, this paper analyses whether virtual sociability affects SMP decision in a sample of 34,715 individuals in 14 European countries.
Findings
The results show that internet users are more likely to be stockowners. However, the obtained evidence does not support either an informational effect or a social multiplier effect of the virtual sociability. After controlling by the country’s SMP rates, a positive effect of internet usage on SMP decision remains, suggesting that contextual factors matter rather than internet usage per se. Thus, in countries where individuals are “used” to being stockholders, the habit of using internet increases SMP, but the “breeding ground” is a necessary condition.
Originality/value
The massive use of the internet provides a valuable opportunity to find evidence of the frictional costs which would act as inhibitors of the SMP, as economic theory hypothesised. After some promising results, the differences in the evolution of both the SMP and internet usage rates have not confirmed the initial enthusiasm. In addition, the question of why the SMP rates systematically differ across countries still remains open.
Keywords
Citation
Fernández-López, S., Rey-Ares, L. and Vivel-Búa, M. (2018), "The role of internet in stock market participation: just a matter of habit?", Information Technology & People, Vol. 31 No. 3, pp. 869-885. https://doi.org/10.1108/ITP-06-2017-0191
Publisher
:Emerald Publishing Limited
Copyright © 2018, Emerald Publishing Limited