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Article: Suitability Checks and Household Investments in Structured Products

TitleSuitability Checks and Household Investments in Structured Products
Authors
Issue Date2015
PublisherCambridge University Press. The Journal's web site is located at http://journals.cambridge.org/action/displayJournal?jid=jfq
Citation
Journal of Financial and Quantitative Analysis, 2015, v. 50 n. 3, p. 597-622 How to Cite?
AbstractThe suitability of complex financial products for household investors is an important issue in light of consumer financial protection. The U.S. Dodd-Frank Act, for instance, mandates that distributors check suitability when selling structured products to retail investors. However, little empirical evidence exists on such transactions. Using data from Hong Kong, we find that investors purchase 8% more structured products, on average, when the suitability is not checked. The effect of suitability checks is more pronounced for less financially literate investors. Moreover, investors tend to buy products with lower risk-adjusted returns when product suitability is not checked.
Persistent Identifierhttp://hdl.handle.net/10722/191985
ISSN
2015 Impact Factor: 1.628
2015 SCImago Journal Rankings: 2.998
SSRN

 

DC FieldValueLanguage
dc.contributor.authorChang, EC-
dc.contributor.authorTang, Y-
dc.contributor.authorZhang, MB-
dc.date.accessioned2013-10-15T07:45:02Z-
dc.date.available2013-10-15T07:45:02Z-
dc.date.issued2015-
dc.identifier.citationJournal of Financial and Quantitative Analysis, 2015, v. 50 n. 3, p. 597-622-
dc.identifier.issn0022-1090-
dc.identifier.urihttp://hdl.handle.net/10722/191985-
dc.description.abstractThe suitability of complex financial products for household investors is an important issue in light of consumer financial protection. The U.S. Dodd-Frank Act, for instance, mandates that distributors check suitability when selling structured products to retail investors. However, little empirical evidence exists on such transactions. Using data from Hong Kong, we find that investors purchase 8% more structured products, on average, when the suitability is not checked. The effect of suitability checks is more pronounced for less financially literate investors. Moreover, investors tend to buy products with lower risk-adjusted returns when product suitability is not checked.-
dc.languageeng-
dc.publisherCambridge University Press. The Journal's web site is located at http://journals.cambridge.org/action/displayJournal?jid=jfq-
dc.relation.ispartofJournal of Financial and Quantitative Analysis-
dc.rightsJournal of Financial and Quantitative Analysis. Copyright © Cambridge University Press.-
dc.rightsCreative Commons: Attribution 3.0 Hong Kong License-
dc.titleSuitability Checks and Household Investments in Structured Products-
dc.typeArticle-
dc.identifier.emailChang, EC: ecchang@business.hku.hk-
dc.identifier.emailTang, Y: yjtang@hku.hk-
dc.identifier.authorityChang, EC=rp01050-
dc.identifier.authorityTang, Y=rp01096-
dc.description.naturepostprint-
dc.identifier.doi10.1017/S0022109015000265-
dc.identifier.hkuros220450-
dc.identifier.hkuros249490-
dc.identifier.volume50-
dc.identifier.issue3-
dc.identifier.spage597-
dc.identifier.epage622-
dc.publisher.placeUnited Kingdom-
dc.identifier.ssrn2013230-

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