Analysis shows increased financial inclusion and risk taking in investments via FinTech adoption, suggesting broad implications for under-banked communities.
We study household finance in the age of FinTech, where digital payments are integrated with various financial services through all-in-one super apps. We hypothesize that increased FinTech adoption via digital payments can lower the nonmonetary costs (e.g., psychological barriers) associated with financial market participation. We find that higher FinTech adoption leads to greater participation and increased risk taking in mutual fund investments. Using distance from Ant as an instrument for FinTech penetration, as well as the exogenous penetration of QRPay in Shenzhen, we further provide causal evidence from digital payment to risky fund investment. Moreover, the effect of FinTech is stronger among individuals who are otherwise more constrained, those with higher risk tolerance, or those living in under-banked counties. This paper was accepted by Will Cong, finance. Funding: C. Y. Hong acknowledges financial support from the National Natural Science Foundation of China [Grant 72003125]. X. Lu acknowledges financial support from the National Natural Science Foundation of China [Grant 72473028]. J. Pan acknowledges financial support from the National Natural Science Foundation of China [Grant W2431051]. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2024.04423 .
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Hong et al. (2025) studied this question.
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