The Post-Pandemic Investor Surge and UPI Growth: A Structural Break Analysis of India’s Retail Equity Ecosystem

DOI

10.2991/978-94-6239-772-9_39How to use a DOI?

Keywords

UPI; Demat; Toda-Yamamoto causality; ARDL Bounds Testing; COVID-19; India

Abstract

Policy discourse on India’s digital finance transformation rests on a near-universal assumption: the Unified Payments Interface (UPI), now the world’s largest real-time payment system, is pulling households into formal capital markets, and further expanding UPI will continue to deepen retail equity participation. This paper formally tests that assumption and finds that the data invert it.

Using 103 monthly observations from May 2017 to December 2025, a Toda-Yamamoto modified Wald procedure and an ARDL bounds testing approach are deployed jointly, with Nifty 50 returns as a market-performance control and a COVID-19 regime dummy whose validity is verified through Chow, CUSUM, and Bai-Perron procedures. The two series share strong post-pandemic co-movement but are linked by an asymmetric causal channel: new demat openings Granger-cause UPI volume at the one-percent level, while UPI volume does not Granger-cause demat openings at any lag length tested. Variance decomposition reinforces the direction; demat shocks explain nearly half of UPI variance at a two-year horizon, while UPI shocks explain under two percent of demat variance at any horizon.

Three implications follow. The supply-side framing of digital finance, in which payment infrastructure leads to capital market entry, is not borne out; the demand-pull theory of financial innovation provides the better fit. The relationship is essentially a post-pandemic phenomenon, suggesting COVID-19 activated the mechanism rather than disturbing it. The policy assumption that further UPI penetration will broaden retail equity participation by itself is left without empirical support; deepening capital market participation will require interventions at the equity entry margin.

Copyright

© 2026 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - Sakshi Singh
AU  - Rajeena Syed
PY  - 2026
DA  - 2026/09/07
TI  - The Post-Pandemic Investor Surge and UPI Growth: A Structural Break Analysis of India’s Retail Equity Ecosystem
BT  - Proceedings of the 2nd International Conference on Innovations and Challenges in Financial Technology (ICICFT 2025)
PB  - Atlantis Press
SP  - 538
EP  - 554
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6239-772-9_39
DO  - 10.2991/978-94-6239-772-9_39
ID  - Singh2026
ER  -