to the overall welfare improvement brought about by information technology. in the area of mortgage lending, for example, credit decisions today are routinely made in minutes rather than days and at much lower cost than a decade ago. freddie mac reports that the cost of originating mortgage loans processed through their system has fallen hundreds of dollars, helping to overcome one of the main barriers to homeownership - a lack of available savings to meet closing costs and downpayment requirements. another benefit of automated underwriting is that credit decisions have become more transparent, to both lenders and potential borrowers. individuals can easily obtain their credit report and credit score, check whether any information in the report is incorrect, and learn how they can improve their credit standing. in short, while the paper raises important concerns about equity markets, other areas of finance provide evidence that the information age has brought significant benefits in the form of increased transparency and competition, lower costs, more appropriate pricing, and broader access to credit. technology has also expanded the ways in which customers can conduct business with financial institutions, which has the potential to increase welfare. for example, the need for “ in - person visits ” has diminished as financial service providers have established centralized call centers to facilitate telephone banking, developed web sites to allow internet banking and software to permit pc banking, and promoted the use of direct deposits and pre - authorized debits. according to recent statistics, nearly 40 percent of all u. s. banks now provide some form of web site through which they can communicate with customers, and almost 15 percent provide web sites that can be used to conduct banking transactions. these numbers are growing rapidly. of the banks with more than $ 500 million in assets, nearly 50 percent now provide web sites that can be used to conduct transactions. as the need for in - person visits declines, we might expect customers to broaden the geographic area within which they search for providers of financial services, leading to increased competition. clearly, mortgages and credit cards already fall into this category of financial product. nonetheless, the implications of these newer delivery channels for banking products other than mortgages and credit cards seem more potential than real for the vast majority of bank retail customers. for example, despite the expanded options made available to customers as a result of technological advances, data collected in the federal reserve ’ s 1998 survey of consumer finances and 1998 survey of small business finances indicate that households and small businesses still rely very heavily on in - person visits to carry out their financial transactions.

) or income ( about $ 62, 000 ) between the two groups, and investors in both groups tend to be well educated, although the proportion with a college or postgraduate degree is a little lower for the new - investor group. with regard to their portfolios, the median investor in each group held only a few stocks and did little or no trading in 1998. the new - investor group tended to have a higher self - assessed tolerance for risk, which might suggest that these investors gravitated more to technology stocks, which have had such a wild ride in recent years. however, it ’ s also noteworthy that this group had more exposure to the equity market through prior ownership of stock mutual funds than did investors who first purchased individual equities between 1990 and 1995. this comparison is based on unpublished tabulations of the survey data that were kindly provided by the investment company institute. however, there are some very active traders in both groups. the average number of stock trades for each group in 1998 was seven, far above the median. selected characteristics of households that first purchased individual stocks in the 1990s ( median 1998 values, except for variables calculated as percentages ) household characteristics age as of survey college or postgraduate degree ( percent ) income financial assets as of survey number of individual stocks owned as of survey number of individual stock transactions in 1998 willing to take more than average risk ( percent ) already had owned a stock mutual fund ( percent ) first purchase of individual stocks outside retirement plans 1990 - 1995 after 1995 $ 62, 500 $ 120, 000 $ 62, 100 $ 70, 600 source : unpublished tabulations provided by the investment company institute, based on data from the “ equity ownership in america ” survey, jointly sponsored by the investment company institute and the securities industry association in 1999. these observable characteristics are, of course, only crude proxies for what we really want to measure - the degree of market knowledge and sophistication. still, this survey provides little reason to believe that the new purchasers of individual stocks are especially likely to be duped by misleading information. the survey results, combined with the data indicating a shift toward institutional holdings of equity, cast doubt on the authors ’ assertion that information technology has “ brought unsophisticated investors in droves to the stock market ”. i would feel more comfortable with an alternative story, which goes as follows. the late 1990s were a period of optimism about the prospects for the u. s. economy, reflecting the