Explaining the Demand for Structured Financial Products: Survey and Field Experiment Evidence

Abstract:     
In many countries structured investment products are popular among retail investors. We explain the demand for these products using unique field data where we let subjects freely design their "favorite" structured product. Results suggest that the supply with capital protected products (guarantee certificates) might indeed be demand-driven. This does not seem to be the case for other product categories where marketing and sales practices might play a more important role. In a survey among financial practitioners we find furthermore that a demand for capital protected products can be explained by loss aversion and saving motifs, e.g. for buying a house.

Number of Pages in PDF File: 19

Keywords: Structured financial products, capital protected products, loss aversion

JEL Classification: D84, G11, G21, C9

working papers series