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FinTech, investor sophistication and financial portfolio choices

Author

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  • Gambacorta, Leonardo
  • Gambacorta, Romina
  • Mihet, Roxana

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.

Suggested Citation

  • Gambacorta, Leonardo & Gambacorta, Romina & Mihet, Roxana, 2023. "FinTech, investor sophistication and financial portfolio choices," CEPR Discussion Papers 18173, Centre for Economic Policy Research.
    • Handle: RePEc:cpr:ceprdp:18173
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    Cited by:

    1. is not listed on IDEAS
    2. Salha Ben Salem & Halilibrahim Gökgöz & Azza Béjaoui & Ahmed Jeribi, 2025. "Can Fintech indices hedge VIX and global banking volatility? Evidence from a dynamic short-term perspective," Digital Finance, Springer, vol. 7(4), pages 1013-1041, December.

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    Keywords

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    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • G5 - Financial Economics - - Household Finance
    • G4 - Financial Economics - - Behavioral Finance
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • L8 - Industrial Organization - - Industry Studies: Services
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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