Affiliation:
1. Bank for International Settlements , Switzerland and
2. CEPR , Switzerland and
3. Banca d’Italia , Italy
4. Swiss Finance Institute at HEC Lausanne , Switzerland and CEPR
Abstract
Abstract
This paper analyzes 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 2004-2020. 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. (JEL: G1, G5, G4, D83, L8, O3)
Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.
Funder
Sandoz Family Foundation's Monique de Meuron Programme
Publisher
Oxford University Press (OUP)
Subject
Economics and Econometrics,Finance,Business and International Management
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