Sources of information and portfolio allocation

Su Hyun Shin, Kyoung Tae Kim and Martin Seay

Journal of Economic Psychology, 2020, vol. 76, issue C

Abstract: This research investigates the relationship between how a household receives financial information and the degree to which investment portfolios are diversified. Diversification is measured as allocation across asset classes and share of assets held in each asset class. Propensity score-based techniques incorporating stratification and weighting are employed to better isolate causal links, while also controlling for objective and subjective financial literacy and overconfidence. Results indicate that the use of financial planners and brokers is associated with an increase in asset class diversification. Households that consult with financial planners and bankers allocate their wealth systematically different from those who do not. These results highlight the role that financial professionals play in helping households make investment decisions.

Keywords: Information; Diversification; Financial advisor; Financial literacy; Overconfidence (search for similar items in EconPapers)
JEL-codes: D14 G11 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:joepsy:v:76:y:2020:i:c:s0167487018303696

DOI: 10.1016/j.joep.2019.102212

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