Digital Reach, Consumption, and Equity Market Deepening: Evidence from ASEAN-5

This study examined the relationship between digital market reach, household consumption, and financial deepening in selected ASEAN economies from 2000 to 2023. From a macro-level perspective, the study treated internet access as a proxy for marketing infrastructure, household final consumption expenditure per capita growth was specified as the mediating variable, and market capitalization of listed domestic companies as a percentage of GDP was used as the principal indicator of financial deepening. Using annual secondary data from the World Development Indicators, the study analyzed a balanced ASEAN-5 panel comprising Indonesia, Malaysia, the Philippines, Singapore, and Thailand. The empirical strategy employed two-way fixed-effects regression models with country and year effects, including a one-year lag for internet access, and robustness checks using broadband subscriptions, mobile cellular subscriptions, turnover ratio, and total value traded. The results showed that lagged internet access had a positive and statistically significant association with equity market capitalization, indicating that stronger digital connectivity was linked to the capitalization dimension of financial deepening. However, internet access did not significantly predict household consumption growth, and household consumption did not mediate the relationship between internet access and market capitalization. In the mediated model, household consumption entered with a negative coefficient, suggesting that short-run aggregate demand was not the principal channel through which digital market reach was associated with stock-market scale in the selected ASEAN economies. Robustness checks further showed that fixed broadband subscriptions were positively associated with market capitalization, while the results were weaker for mobile subscriptions and liquidity-based stock-market indicators. The study concludes that digital connectivity may function as a form of macro-level marketing infrastructure associated with equity-market deepening, although the expected household-consumption transmission mechanism is not supported. The findings contribute to the literature on macro-marketing, digital transformation, and financial development by clarifying that digital market reach appears to be more strongly related to stock-market size than to short-run household demand expansion.