No abstract

We study household finance in the age of FinTech, where consumption, payments, and investments take place via all-in-one super-apps. We hypothesize that FinTech adoption can improve household risk-taking by breaking down the traditional physical and psychological barriers and enhance financial inclusion. Taking advantage of an individual-level FinTech dataset, we find that higher FinTech adoption, both at the individual-level and the county-level instrumented by distance-from-Hangzhou, results in higher participation and more risk-taking in mutual-fund investments. Moreover, individuals who are otherwise more constrained, those with higher risk tolerance or living in under-banked counties, stand to benefit more from the advent of FinTech.

The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.NBER working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.

the 2019 China FinTech Research Conference, the 2020 Finance Down Under Conference, the behavioral finance online seminar organized by Wei Xiong. We are grateful to the Howbuy platform for data provision. We thank Linchen Liu, Shiwen Tian, and Heming Zhang for research assistance. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. NBER working papers are circulated for discussion and comment purposes. They have not been peerreviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.

We present evidence of investors underreacting to the absence of events in financial markets. Routine-based insiders strategically choose to be silent when they possess private information not yet reflected in stock prices. Consistent with our hypothesis, insider silence following a routine sell (buy) predicts positive (negative) future returns, as well as fundamentals. The return predictability of insider silence is stronger among firms with a poor information environment and facing higher arbitrage costs, and a large fraction of abnormal returns concentrates on future earnings announcements. A long–short strategy that exploits insiders’ strategic silence behavior generates abnormal returns of 6% to 10% annually.