Who invests in cryptocurrency? The role of overconfidence among American investors

Chhatwani, Malvika; Parija, Arpit Kumar

doi:10.1016/j.socec.2023.102107

Cited by 5 publications

(1 citation statement)

References 30 publications

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“…A key finding of the study is the positive correlation indicating confidence in financial decision-making among cryptocurrency investors, which suggests financial literacy and prior investment experience. However, it could also imply overconfidence or underestimation of risks, as noted in Chhatwani and Parija (2023). Additionally, the study shows that scepticism towards the transparency and integrity of financial institutions is associated with a higher likelihood of cryptocurrency ownership, deviating from previous research by Stix (2019) and Auer and Tercero-Lucas (2021).…”

Section: Resultscontrasting

confidence: 61%

Do cryptocurrency investors in the UK need more protection?

Wang

2024

JFRC

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Purpose The existing literature offers various perspectives on integrating cryptocurrencies into investment portfolios; yet, there is a gap in understanding the behaviours, attitudes and cross-investment links of individual investors. This study, grounded in the modern portfolio theory and the random walk theory, aims to add empirical insights that are specific to the UK context. It explores four hypotheses related to the influence of socio-demographics, digital adoption, cross-investment behaviours and financial attitudes on cryptocurrency owners. Design/methodology/approach This study uses a logistic regression model with secondary data from the Financial Lives Survey 2020 to assess the factors impacting cryptocurrency ownership. A total of 29 variables are used, categorized into four groups aligned with the hypotheses. Additionally, hierarchical clustering analysis was conducted to further explore the cross-investment links. Findings The study reveals a significant lack of diversification among UK cryptocurrency investors, a pronounced inclination towards high-risk investments such as peer-to-peer lending and crowdfunding, and parallels with gambling behaviours, including financial dissatisfaction and a propensity for risk-taking. It highlights the influence of demographic traits, risk tolerance, technological literacy and emotional attitudes on cryptocurrency investment decisions. Originality/value This study provides valuable insights into cryptocurrency regulation and retail investor protection, underscoring the necessity for tailored financial education and a holistic regulatory approach for investment products with comparable risk levels, with the aim of minimizing regulatory arbitrage. It significantly enhances our understanding of the unique dynamics of cryptocurrency investments within the evolving financial landscape.

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Section: Resultscontrasting

confidence: 61%