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Article: Suitability Checks and Household Investments in Structured Products
Title | Suitability Checks and Household Investments in Structured Products |
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Authors | |
Issue Date | 2015 |
Publisher | Cambridge 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? |
Abstract | The 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 Identifier | http://hdl.handle.net/10722/191985 |
ISSN | 2023 Impact Factor: 3.7 2023 SCImago Journal Rankings: 3.980 |
SSRN | |
ISI Accession Number ID |
DC Field | Value | Language |
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dc.contributor.author | Chang, EC | - |
dc.contributor.author | Tang, Y | - |
dc.contributor.author | Zhang, MB | - |
dc.date.accessioned | 2013-10-15T07:45:02Z | - |
dc.date.available | 2013-10-15T07:45:02Z | - |
dc.date.issued | 2015 | - |
dc.identifier.citation | Journal of Financial and Quantitative Analysis, 2015, v. 50 n. 3, p. 597-622 | - |
dc.identifier.issn | 0022-1090 | - |
dc.identifier.uri | http://hdl.handle.net/10722/191985 | - |
dc.description.abstract | The 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.language | eng | - |
dc.publisher | Cambridge University Press. The Journal's web site is located at http://journals.cambridge.org/action/displayJournal?jid=jfq | - |
dc.relation.ispartof | Journal of Financial and Quantitative Analysis | - |
dc.rights | Journal of Financial and Quantitative Analysis. Copyright © Cambridge University Press. | - |
dc.title | Suitability Checks and Household Investments in Structured Products | - |
dc.type | Article | - |
dc.identifier.email | Chang, EC: ecchang@business.hku.hk | - |
dc.identifier.email | Tang, Y: yjtang@hku.hk | - |
dc.identifier.authority | Chang, EC=rp01050 | - |
dc.identifier.authority | Tang, Y=rp01096 | - |
dc.description.nature | postprint | - |
dc.identifier.doi | 10.1017/S0022109015000265 | - |
dc.identifier.scopus | eid_2-s2.0-84939267397 | - |
dc.identifier.hkuros | 220450 | - |
dc.identifier.hkuros | 249490 | - |
dc.identifier.volume | 50 | - |
dc.identifier.issue | 3 | - |
dc.identifier.spage | 597 | - |
dc.identifier.epage | 622 | - |
dc.identifier.isi | WOS:000359788000012 | - |
dc.publisher.place | United Kingdom | - |
dc.identifier.ssrn | 2013230 | - |
dc.identifier.issnl | 0022-1090 | - |