Bank affiliation and lottery-like characteristics of mutual funds

Xiaoxiao Wang

International Review of Economics & Finance, 2024, vol. 93, issue PB, 944-963

Abstract: This study investigates the impact of commercial bank affiliation on mutual funds' lottery-like characteristics. Existing literature has extensively explored the benefits or costs of commercial bank affiliation in the asset management industry. Using a sample of Chinese mutual funds between 2003 and 2019, we reveal that bank affiliation significantly decreases these characteristics, and this phenomenon exhibits better performance. Our evidence suggests that affiliated funds benefit from information advantages. Notably, affiliated funds attract cash inflows by enhancing their performance rather than catering to investors’ lottery preferences. These results emphasize the role of gambling behavior in the mutual fund industry by focusing on the significance of ownership, in this case, by commercial banks.

Keywords: Commercial bank affiliation; Mutual funds; Skewness; Idiosyncratic skewness; Lottery-like characteristics; Investor flows (search for similar items in EconPapers)
JEL-codes: G11 G21 G23 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:93:y:2024:i:pb:p:944-963

DOI: 10.1016/j.iref.2024.05.041

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