The Impact of Generative Artificial Intelligence on Individual Manual Investment Decisions: Empirical Evidence from Mutual Funds

Posted: 27 Nov 2023 Last revised: 19 Jan 2024

See all articles by Yue Guo

Yue Guo

Southern University of Science and Technology

Siliang Tong

Nanyang Business School, Nanyang Technological University

Tao Chen

Nanyang Business School, Nanyang Technological University

Subodha Kumar

Temple University - Fox School of Business

Shumiao Ouyang

University of Oxford, Saïd Business School

Date Written: November 25, 2022

Abstract

The rapid ascent of generative artificial intelligence (GAI) has led individual investors to seek guidance from GAI-based consulting tools such as GAI-based investment consultants (GAICs). Yet, there is scant empirical effort examining the business impact of such GAI tools on individual investors' financial market investments. To fill the critical gap, we collaborate with Ant Fortune, Alibaba’s leading investment arm, and analyze data related to the rollout of Ant Fortune’s GAIC, Zhi Xiaobao. Our analyses provide the first empirical evidence showing that the use of GAIC positively influences investment decisions, redemption activities, and overall returns. Interestingly, contrary to the common belief that novice investors could benefit from AI investment tools for accessible investment information, we find that experienced investors harness more benefits from GAIC, utilizing their existing financial acumen. In addition, we document that the platform’s influence on returns is more significant for risk-seeking investors, suggesting that GAIC could amplify their market decision making efficacy. Despite that novice and risk-averse investors engage more redemption behaviors, they do not attain the equivalent investment return relative to experienced and risk-seeking counterparts, highlighting the role of financial literacy in harnessing the economic benefits of GAICs. In summary, GAICs enhance decision making for experienced and risk-tolerant investors but offer limited advantages to novice and risk-averse investors. Our research not only provides essential managerial insights for platform managers considering GAIC applications, but also sheds light for policy makers in understanding how to improve the use of GAICs for vulnerable investor segments.

Keywords: fintech, generative AI, financial investment, algorithm and human, quasi-natural experiment

JEL Classification: G15,D14

Suggested Citation

Guo, Yue and Tong, Siliang and Chen, Tao and Kumar, Subodha and Ouyang, Shumiao, The Impact of Generative Artificial Intelligence on Individual Manual Investment Decisions: Empirical Evidence from Mutual Funds (November 25, 2022). Nanyang Business School Research Paper No. 23-24, Available at SSRN: https://ssrn.com/abstract=4644157

Yue Guo (Contact Author)

Southern University of Science and Technology ( email )

1088 Xueyuan Road
Shenzhen, 518055
China

Siliang Tong

Nanyang Business School, Nanyang Technological University ( email )

Singapore, 639798
Singapore

Tao Chen

Nanyang Business School, Nanyang Technological University ( email )

Singapore, 639798
Singapore

Subodha Kumar

Temple University - Fox School of Business ( email )

Philadelphia, PA 19122-____
United States

HOME PAGE: http://sites.temple.edu/subodha/

Shumiao Ouyang

University of Oxford, Saïd Business School ( email )

HOME PAGE: http://https://www.shumiaoouyang.com/

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