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FinTech, Investor Sophistication and Financial Portfolio Choices

Author

Listed:
  • Leonardo Gambacorta

    (Bank for International Settlements (BIS); Centre for Economic Policy Research (CEPR))

  • Romina Gambacorta

    (Bank of Italy)

  • Roxana Mihet

    (Swiss Finance Institute - HEC Lausanne)

Abstract

This paper analyses the links between advances in financial technology, investors’ sophistication, and the composition and returns of their financial portfolios. We develop a simple portfolio choice model under asymmetric information and derive some theoretical predictions. Using detailed microdata from Banca d’Italia, we test these predictions for Italian households over the period 2004- 20. In general, heterogeneity in portfolio composition and in returns between sophisticated and unsophisticated investors grows with improvements in financial technology. This heterogeneity is reduced only if financial technology is accessible to everyone and if investors have a similar capacity to use it.

Suggested Citation

  • Leonardo Gambacorta & Romina Gambacorta & Roxana Mihet, 2023. "FinTech, Investor Sophistication and Financial Portfolio Choices," Swiss Finance Institute Research Paper Series 23-27, Swiss Finance Institute.
    • Handle: RePEc:chf:rpseri:rp2327
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Inequality; Inclusion; FinTech; Innovation; Matthew Effect.;
    All these keywords.

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • G5 - Financial Economics - - Household Finance
    • G4 - Financial Economics - - Behavioral Finance
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • L8 - Industrial Organization - - Industry Studies: Services
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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