Topic: The Economic Impact of Distributing Financial Products on Third-Party Online Platforms

Speaker: Jun Pan, Professor of Finance, The Shanghai Advanced Institute of Finance (SAIF), Shanghai Jiao Tong University

Date: October 30, 2019 (Wednesday)

Time: 10:00am-11:30am

Location: 4-101, Building 4

Language: English 

Abstract:

The emergence of third-party online platforms in intermediating financial products has been a new and exciting development in FinTech. In China, the platforms are allowed to distribute mutual funds since 2012, and have quickly grown into a formidable presence. Examining the economic impact of this new distributional channel, we use the staggered entrance of mutual funds onto the platforms to identify the casual effect of online platforms on the behaviors of fund investors and fund managers. We find that, post-platform, fund flows become markedly more sensitive to fund performance. The net flow to the top 10% performing funds more than triples their pre-platform level, and this pattern of increased performance sensitivity is further confirmed using private data from Howbuy, a top-five platform in China.  Consistent with the added incentive of becoming a top ranking performer in the era of large-scale platforms, we find that fund managers increase their risk taking to enhance the probability of getting into the top rank. Meanwhile, the organization structure of large fund families weakens as the introduction of platforms levels the playing field for all funds.

About the speaker:

Jun Pan is currently a Professor of Finance at Shanghai Advanced Institute of Finance (SAIF), Shanghai Jiao Tong University. Prior to joining SAIF in 2019, she was the School of Management Distinguished Professor of Finance and Professor of Finance at MIT Sloan School of Management. Jun has a B.S. degree in Physics from Shanghai Jiao Tong University, a Ph.D. in Physics from New York University, and a Ph.D. in Finance from Stanford University.