Going Mobile, Investor Behavior, and Financial Fragility

Posted: 18 Jan 2019

See all articles by Xiao Cen

Xiao Cen

Columbia University - Columbia Business School

Multiple version iconThere are 2 versions of this paper

Date Written: December 15, 2019

Abstract

This study investigates how mobile trading technology affects retail investor behavior and mutual fund fragility using proprietary individual-level trading data around a natural experiment – the release of a popular mobile trading application (“app”) by a leading investment adviser in China. “Going mobile” raises investor attention and trading volume through aggravating investors’ over-confidence and self-control problems. The mobile app significantly boosts flow volatility and makes investor flow more sensitive to short-term fund returns and market sentiment. As a result, fund performance suffers due to heightened liquidity costs. The funds more exposed to the shock see a greater decline in abnormal returns, attributed to incremental fund flows through the trading app.

Keywords: mobile trading; financial technology (fintech); financial fragility; mutual fund flows; investor behavior

JEL Classification: G11, G23, O33

Suggested Citation

Cen, Xiao, Going Mobile, Investor Behavior, and Financial Fragility (December 15, 2019). Available at SSRN: https://ssrn.com/abstract=3312411

Xiao Cen (Contact Author)

Columbia University - Columbia Business School ( email )

3022 Broadway
New York, NY 10027
United States

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