Payment methods and the disposition effect: Evidence from Indonesian mutual fund trading

Aldo Fortunato Dalla Costa, Vito Mollica and Abhay Singh

Journal of Behavioral and Experimental Finance, 2021, vol. 30, issue C

Abstract: This paper investigates the link between payment methods used by investors in mutual funds and the tendency with which investors realize gains earlier than losses — the disposition effect. We utilize a proprietary dataset detailing investor trading accounts in Indonesian mutual funds, whom are permitted to buy and sell securities in exchange for cash or other assets. These two payment methods are economically equivalent in value and cost; however, differ in payment saliency. We find that more salient payment methods are associated with a higher disposition effect and vice versa, less salient payments are associated with a smaller tendency to realize gains more readily than losses.

Keywords: Disposition effect; Payment methods; Saliency (search for similar items in EconPapers)
JEL-codes: G11 G4 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:beexfi:v:30:y:2021:i:c:s2214635021000472

DOI: 10.1016/j.jbef.2021.100503

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