Template-Type: ReDIF-Paper 1.0
Author-Name: Leonardo Gambacorta
Author-X-Name-First: Leonardo
Author-X-Name-Last: Gambacorta
Author-Name: Romina Gambacorta
Author-X-Name-First: Romina
Author-X-Name-Last: Gambacorta
Author-Name: Roxana Mihet
Author-X-Name-First: Roxana
Author-X-Name-Last: Mihet
Title: FinTech, investor sophistication and financial portfolio choices
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.
Creation-Date: 2023-04
File-URL: https://www.bis.org/publ/work1091.pdf
File-Format: Application/pdf
File-Function: Full PDF document
File-URL: https://www.bis.org/publ/work1091.htm
File-Format: text/html
Number: 1091
Keywords: inequality, inclusion, FinTech, innovation, Matthew Effect
Classification-JEL: G1, G5, G4, D83, L8, O3
Handle: RePEc:bis:biswps:1091