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Abstract
This paper studies how financial technology adoption influences household finances. Using a representative household survey, I construct a technology adoption score by applying item response theory and examine its influence on financial outcomes. Individuals with higher adoption scores gather financial information more independently and rely mainly on online sources for financial advice. They are also more likely to overcome portfolio inefficiencies linked to information barriers, such as home bias and over-concentration. At the same time, adopters display less prudence, reflected in shorter planning horizons and a stronger preference for consumption. These results hold when I use the phased roll-out of a major peer-to-peer payment app as an instrument for adoption. The benefits of overcoming information barriers are concentrated among the financially literate, while the negative effects on prudence fall on the illiterate. Financially illiterate households only benefit from technology when it is used for delegation and simplified investment strategies such as mutual fund and ETF investing.
