Going Mobile, Investor Behavior, and Financial Fragility
Posted: 18 Jan 2019
Date Written: December 15, 2019
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: Suggested Citation