Effect of consumers' online shopping on their investment in money market funds on ecommerce platforms

Along with the rapid growth of online and mobile shopping, a recent interesting phenomenon is the introduction of money market funds by many ecommerce platforms. The goal might be to provide consumers the one-stop convenience of both shopping and short-term investment. So far, little rigorous work has examined the relationship between online shopping and investment in ecommerce money market funds (eMMFs). In this study, we examine how consumers' online-shopping expenditure affects their eMMF investment amounts using data from the China Household Finance Survey (CHFS) dataset. We find that consumers' online-shopping expenditure increases their eMMF investment amounts, holding other variables constant. This effect is significant and positive even after we consider the potential endogeneity issues with seemingly unrelated regression estimation. Further, analyzing whether consumers' risky-market experience could moderate this effect, we find the coefficient of the moderating term to be significant after we consider the potential endogeneity issues. These findings suggest that consumers' eMMF investments is largely affected by their online-shopping experience, and this effect is even stronger for those with risky-market participation.