FinTech Platforms and Mutual Fund Distribution

56 Pages Posted: 5 Nov 2019 Last revised: 12 May 2022

See all articles by Claire Yurong Hong

Claire Yurong Hong

Shanghai Jiao Tong University (SJTU) - Shanghai Advanced Institute of Finance (SAIF)

Xiaomeng Lu

Fudan University, Fanhai International School of Finance

Jun Pan

Shanghai Jiao Tong University (SJTU) - Shanghai Advanced Institute of Finance (SAIF); National Bureau of Economic Research (NBER); China Academy of Financial Research (CAFR)

Multiple version iconThere are 2 versions of this paper

Date Written: May 12, 2022

Abstract

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

Suggested Citation

Hong, Claire Yurong and Lu, Xiaomeng and Pan, Jun, FinTech Platforms and Mutual Fund Distribution (May 12, 2022). ADB-IGF Special Working Paper Series “Fintech to Enable Development, Investment, Financial Inclusion, and Sustainability”, Available at SSRN: https://ssrn.com/abstract=3474792 or http://dx.doi.org/10.2139/ssrn.3474792

Claire Yurong Hong (Contact Author)

Shanghai Jiao Tong University (SJTU) - Shanghai Advanced Institute of Finance (SAIF) ( email )

211 West Huaihai Road
Shanghai, China
Shanghai, Shanghai 200030
China

HOME PAGE: http://https://sites.google.com/site/claireyuronghong/

Xiaomeng Lu

Fudan University, Fanhai International School of Finance ( email )

220 Handan Road
Shanghai, 100045
China

Jun Pan

Shanghai Jiao Tong University (SJTU) - Shanghai Advanced Institute of Finance (SAIF) ( email )

Shanghai Jiao Tong University
211 West Huaihai Road
Shanghai, 200030
China

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

China Academy of Financial Research (CAFR)

1954 Huashan Road
Shanghai P.R.China, 200030
China

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