FinTech Platforms and Mutual Fund Distribution
56 Pages Posted: 5 Nov 2019 Last revised: 12 May 2022
Date Written: May 12, 2022
We document a novel platform effect caused by the emergence of FinTech platforms in financial intermediation. In China, platform distributions of mutual funds emerged in 2012 and grew quickly into a formidable presence. Utilizing the staggered entrance of funds onto platforms, we find a marked increase of performance-chasing, driven by the centralized information flow unique to FinTech platforms. This pattern is further confirmed using proprietary data from a top platform. Examining the platform impact on fund managers, we find that, incentivized by the amplified performance-chasing, fund managers increase risk taking to enhance their probability of getting onto the top ranking.
Keywords: Mutual Funds, Platforms, FinTech, Flow-Performance Sensitivity
JEL Classification: D14, G11, G14, L11, L23
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