Payment Methods and the Disposition Effect: Evidences from Indonesian Mutual Fund Trading

12 Pages Posted: 4 Jan 2020

See all articles by Aldo Dalla Costa

Aldo Dalla Costa

Macquarie University - Faculty of Business and Economics

Vito Mollica

Macquarie University - Faculty of Business and Economics

Date Written: January 20, 2019

Abstract

The entire research on alternative payment methods focuses on buyers of goods and services, however there are no similar studies on financial investors. Using a unique dataset, we explore the effects of different transaction mechanisms amongst mutual fund traders in the emerging economy of Indonesia. Our results show that, as with common buyers, alternative payment methods influence traders too. In particular, we find that certain types of payment mechanism reduce people’s Disposition Effect: the bias to realize gains more readily than the losses. Additionally, we also find that different investing methods affect the reluctance to realize losses while alternative divesting systems influence the propensity to lock in winners.

Keywords: payment methods, disposition effect

JEL Classification: G02

Suggested Citation

Dalla Costa, Aldo and Mollica, Vito, Payment Methods and the Disposition Effect: Evidences from Indonesian Mutual Fund Trading (January 20, 2019). 2019 Financial Markets & Corporate Governance Conference, Available at SSRN: https://ssrn.com/abstract=3319121 or http://dx.doi.org/10.2139/ssrn.3319121

Aldo Dalla Costa (Contact Author)

Macquarie University - Faculty of Business and Economics ( email )

Australia

Vito Mollica

Macquarie University - Faculty of Business and Economics ( email )

Sydney, New South Wales 2109
Australia

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