We study the effects of broadband internet use on the investment decisions of individual investors. A public program in Norway provides plausibly exogenous variation in internet use. Our instrumental variables estimates show that internet use causes a substantial increase in stock market participation, driven primarily by increased fund ownership. Existing investors tilt their portfolios towards funds, thereby obtaining more diversified portfolios and higher Sharpe ratios, and do not increase their trading activity in stocks. Overall, access to high-speed internet seems to spur a “democratization of finance”, with individuals making investment decisions that are more in line with the advice from portfolio theory.

More on this topic

BFI Working Paper·Apr 7, 2025

Non-User Utility and Market Power: The Case of Smartphones

Leonardo Bursztyn, Rafael Jiménez-Durán, Aaron Leonard, Filip Milojević, and Christopher Roth
Topics: Financial Markets
BFI Working Paper·Apr 7, 2025

Asset Embeddings

Xavier Gabaix, Ralph Koijen, Robert J. Richmond, and Motohiro Yogo
Topics: Financial Markets
BFI Working Paper·Mar 20, 2025

Credit Card Entrepreneurs

Ufuk Akcigit, Raman S. Chhina, Seyit Cilasun, Javier Miranda, and Nicolas Serrano-Velarde
Topics: Financial Markets