Digital Transmission of Financial Knowledge: Evidence from Stock Market Investment

We study digital platforms’ transmission of financial knowledge and their effects on users’ investment in stocks and performance. Leveraging a proprietary dataset from one of China’s largest digital platforms, we measure users’ acquisition of financial knowledge through various platform information channels. Using a quasi-experiment setting to instrumentalize the acquisition, we find that the acquisition substantially increases stock market participation and enhances investment behaviors’ sophistication and performance, especially for older, inexperienced, and less wealthy households. Thus, digitalization democratizes finance by providing low-cost and scalable financial education, empowering individuals to make investment decisions aligned with portfolio theory.