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Automatic vs Manual Investing: Role of Past Performance

Author

Listed:
  • Said Kaawach

    (University of Huddersfield)

  • Oskar Kowalewski

    (IESEG School of Management)

  • Oleksandr Talavera

    (University of Birmingham)

Abstract

Using unique data from a leading peer-to-peer (P2P) lending platform, we investigate the link between past investment performance and choice of auto-investing tool. Our results suggest that investors with poorly performing loan portfolios are more likely to switch automatically. This negative relationship can be explained by algorithmic aversion or investor inattention. In other words, the results suggest that good-performing investors who pay close attention to their loan portfolios or are not interested in using automated services are more likely to rely on themselves in manual mode. These results are robust to alternative specifications.

Suggested Citation

  • Said Kaawach & Oskar Kowalewski & Oleksandr Talavera, 2023. "Automatic vs Manual Investing: Role of Past Performance," Discussion Papers 23-04, Department of Economics, University of Birmingham.
    • Handle: RePEc:bir:birmec:23-04
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    File URL: https://repec.cal.bham.ac.uk/pdf/23-04.pdf
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    More about this item

    Keywords

    FinTech; Peer-to-Peer Lending; Investor Switching; Automatic Bidding;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G40 - Financial Economics - - Behavioral Finance - - - General
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General

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    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Oleksandr Talavera (email available below). General contact details of provider: https://edirc.repec.org/data/debhauk.html .

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