Abstract

The information and communication technology promotion policies have been implemented and enforced in both developed and developing countries. China has the most Internet users worldwide. Although it is assumed that the Internet use may affect the risky financial market participation, the empirical evidence on the issue is scarce. Using a national longitudinal data, this study investigates the impact of Internet use on individuals’ participation in risky financial markets in China after considering the endogeneity issues. Three key findings emerged. First, Internet use has a significantly positive effect on participation in risky financial markets. Second, the positive effect of Internet use is greater for the group aged 30–49 years, the middle and the highly educated group, urban hukou residents, and women as compared to their counterparts. Third, the positive effect of Internet use on risky financial participation may be through three channels—increase in income, information obtaining, and reduction of transaction costs.

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