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Conference Paper: Household investments in structured financial products: pulled or pushed?

TitleHousehold investments in structured financial products: pulled or pushed?
Authors
Chang, ECTang, DYZhang, M
KeywordsStructured products
Financial literacy
Ambiguity aversion
Issue Date2009
Citation
The 17th Conference on the Theories and Practices of Securities and Financial Markets, Kaohsiung, Taiwan, 11-12 December 2009. How to Cite?
AbstractWhy did individual investors buy structured financial products? Were they too greedy to consider the risk involved? Or did the banks lure them to buy? Using unique household investment data from Hong Kong, we show that investor demand of such products (the ‘push’ effect) was not the key driver. Important determinants according to portfolio theories, such as product premium, have little explanatory power to investor's actual allocation decisions. More financially literate investors who can form reasonable expectations about stocks bought less. Education, IQ, and relationship with the distributing banks are statistically significant explanatory variables. However, we can only explain one-fifth of the cross-sectional variations of investment in structured products. The rest could be due to bounded rational investor behaviors and mis-selling by distributors.
Persistent Identifierhttp://hdl.handle.net/10722/127313

 

DC FieldValueLanguage
dc.contributor.authorChang, ECen_HK
dc.contributor.authorTang, DYen_HK
dc.contributor.authorZhang, Men_HK
dc.date.accessioned2010-10-31T13:18:18Z-
dc.date.available2010-10-31T13:18:18Z-
dc.date.issued2009en_HK
dc.identifier.citationThe 17th Conference on the Theories and Practices of Securities and Financial Markets, Kaohsiung, Taiwan, 11-12 December 2009.en_HK
dc.identifier.urihttp://hdl.handle.net/10722/127313-
dc.description.abstractWhy did individual investors buy structured financial products? Were they too greedy to consider the risk involved? Or did the banks lure them to buy? Using unique household investment data from Hong Kong, we show that investor demand of such products (the ‘push’ effect) was not the key driver. Important determinants according to portfolio theories, such as product premium, have little explanatory power to investor's actual allocation decisions. More financially literate investors who can form reasonable expectations about stocks bought less. Education, IQ, and relationship with the distributing banks are statistically significant explanatory variables. However, we can only explain one-fifth of the cross-sectional variations of investment in structured products. The rest could be due to bounded rational investor behaviors and mis-selling by distributors.-
dc.languageengen_HK
dc.relation.ispartofConference on the Theories and Practices of Securities and Financial Markets-
dc.subjectStructured products-
dc.subjectFinancial literacy-
dc.subjectAmbiguity aversion-
dc.titleHousehold investments in structured financial products: pulled or pushed?en_HK
dc.typeConference_Paperen_HK
dc.identifier.emailChang, EC: ecchang@business.hku.hken_HK
dc.identifier.emailTang, DY: yjtang@hku.hken_HK
dc.identifier.emailZhang, M: benzhang@hku.hk, rainozhang@gmail.comen_HK
dc.description.naturepostprint-
dc.identifier.hkuros181501en_HK
dc.description.otherThe 17th Conference on the Theories and Practices of Securities and Financial Markets, Kaohsiung, Taiwan, 11-12 December 2009.-

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