Smart(Phone) Investing? A within Investor-Time Analysis of New Technologies and Trading Behavior
71 Pages Posted: 2 Feb 2021 Last revised: 7 May 2021
Date Written: January 13, 2021
Using transaction-level data from two German banks, we study the effects of smartphones on investor behavior. Comparing trades by the same investor in the same month across different platforms, we find that smartphones increase the purchase of riskier, lottery-type, non-diversifying assets, and of past winners and losers. We find evidence against investors offsetting these trades on other platforms and against digital nudges mechanically driving our results. Smartphone effects are neither transitory nor innocuous: assets purchased via smartphones deliver lower Sharpe ratios. Our findings caution against the indiscriminate use of smartphones as the key technology to increase access to financial markets.
Keywords: fintech, investor behavior, financial risk-taking, lottery-type assets, investment biases
JEL Classification: G11, G40, G50, H31
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