FinTech, investor sophistication and financial portfolio choices

Leonardo Gambacorta, Romina Gambacorta and Roxana Mihet

No 1091, BIS Working Papers from Bank for International Settlements

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.

Keywords: inequality; inclusion; FinTech; innovation; Matthew Effect (search for similar items in EconPapers)
JEL-codes: D83 G1 G4 G5 L8 O3 (search for similar items in EconPapers)
Date: 2023-04
New Economics Papers: this item is included in nep-fmk and nep-pay
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Related works:
Journal Article: FinTech, Investor Sophistication, and Financial Portfolio Choices (2023)
Working Paper: Fintech, investor sophistication and financial portfolio choices (2023)
Working Paper: FinTech, Investor Sophistication and Financial Portfolio Choices (2023)
Working Paper: FinTech, investor sophistication and financial portfolio choices (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:bis:biswps:1091

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