No. 1329 - Can Internet banking affect households' participation in financial markets and financial awareness?

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by Valentina Michelangeli and Eliana VivianoApril 2021

In Italy, the share of households using Internet banking services has increased sharply in recent years. The paper, which exploits data from the Survey of Households Income and Wealth and from banks' supervisory reports in the period 2012-16, studies the impact of the adoption of Internet banking on household decisions to start investing in financial markets and on their financial awareness.

The adoption of Internet banking has a positive impact on household decisions to start investing in financial markets, in particular to hold short term assets with a low risk/return profile. The effect is greater for clients living in small and medium-sized cities, where the supply of Internet banking services is likely to be more limited than in larger ones. Furthermore, over time, the use of Internet banking seems to have increased households' financial awareness.