Information, Overconfidence and Trading: Do the Sources of Information Matter?

We investigate how the strength of the positive association between frequency of trading and information acquisition is dependent on investors’ self-confidence and on the sources of information used by investors. Our results confirm that the more frequently individual investors invest in information, the more they trade in financial products. Our results also confirm previous findings that overconfident investors, who show a better than average bias, trade more frequently. In this paper, we add to this literature by investigating if the strong and positive relationship between investment in information and intensity of trading in financial assets is sensitive to the sources of information used by investors, and if this influence is different for overconfident and non-overconfident investors. We conclude that overconfident investors trade more frequently when they collect information directly using specialized sources and that nonoverconfident investors trade less frequently when they use professional advice from the bank/account manager.Information, overconfidence, investor behaviour, trading, sources of information Classification-G11, G14, D83

The disposition effect among mutual fund participants : a re- examination

Using information on mutual fund trades executed from 1998 to 2017 by 31,513 individual investor clients of a major Portuguese financial institution, we study the relationship between the disposition effect, financial literacy and trading experience. We find that mutual fund investors exhibit strong disposition effect. The tendency to hold losers is partially offset with literacy: not only holding a university degree reduces the propensity to hold on to loser funds but also higher financial knowledge and stronger math skills reduce the disposition effect. Literacy also plays a role in shaping the way experience affects this bias. Evidence of the disposition effect persists after accounting for redemption fees, bad emotions, irrational beliefs, market sentiment and the existence of someone to blame.info:eu-repo/semantics/publishedVersio

Community education matters: representations of female genital mutilation in Guineans immigrant women

Female Genital Mutilation is a cultural tradition, recognized as a violation of human rights and dignity of girls. Many countries develop educational programs that offer alternatives to the ritual. The research questions to which we are seeking answers are: what was the meaning of the practice to the populations? In the community educational programs, what does the alternative ritual consist of? The aims of the study were: to explore the experiences of Guineans immigrant women that lived in communities where the practice was performed, to describe how, where, and who was usually involved, to identify the effects of the mutilation, and to evaluate the effectiveness of the educational programs developed to eradicate the practice. A qualitative design was chosen. Data were collected by a semi-structure interview from eight immigrant women from Guinea Bissau living in the North of Portugal. Participants were never invited to answer if they had undergone the practice in the past. A religious leader was invited to mediate the relationship with them. Findings show that Type II is the most common form of mutilation. It was shaped by a complex interplay of cultural factors related to the initiation into womanhood, the status of woman and the need to be accepted by men. We did not find a direct relation between religion and mutilation. Educational programs offer an alternative to the ritual (“symbolic fanado”). The educational programs are in general inclusive and culturally-sensitive. They contribute to the reduction of the prevalence of female mutilation, involving the community and respecting the local culture. Instead of imposition, the programs develop a cultural action for freedom. As a result, in these programs emerges an alternative to the cutting, well accepted by the population.info:eu-repo/semantics/publishedVersio

Current Perspectives on Frailty in the Elderly, Evaluation Tools and Care Pathways

The concept of frailty is frequently mentioned in studies related to the elderly population. Frailty in the elderly is considered a relevant dimension of quality of life. The concept of frailty has grown in importance because of a need to evaluate the health status of older persons and a need to prevent or at least delay late-life disability and total dependence on self-care. There is to date no clear consensus regarding the definition of frailty; some definitions have been proposed, each with their own strengths and weaknesses. Just as conceptual disagreements arise about what frailty means, there are also disagreements about how to assess it. However, as researchers deepen the concept of frailty and the way to operationalize it, scales and inventories appear that allow us to have a more precise idea of the state of frailty. This aspect is extremely important because assistance strategies may depend on it. One of the most cited aspects is the assessment of the need to provide palliative care. In this chapter, we intend to review the concepts of frailty, operationalization strategies and assessment tools and clarify some ideas from the debate on what frailty is

Contagion phenomena in financial crises : evidence from the Portuguese and Spanish exchange rate crises in the early nineties

Based on the experience of the Portuguese and Spanish financial crises in the early nineties, this paper suggests that the spillover of exchange rate crises may reveal a particular dimension of the financial contagion effect: the presumption of mimetic behavior by monetary authorities. This paper analyses the evolution of the credibility of the escudo and the peseta. We set out to test the existence of a contagion effect, that is, in what way does the polarization of exchange rate expectations in a scenario of devaluation of one currency explain the building up of a similar scenario for the other currency. We also examine the transmission mechanisms of such a scenario. Our results suggest the existence of a one-way contagion effect, of the escudo by the peseta. Speculative attacks against the peseta necessarily give rise to speculative attacks against the escudo, regardless of the evolution of the “fundamentals” of the escudo. In this case, the spillover of financial crises could be better understood by the anticipated mimetic behavior of monetary authorities, rather than by the geographical proximity of the countries in question or by the identical performance of the economies of both

How biased is the behavior of the individual investor in warrants?

Based on the actual trading behavior of individual investors in the Portuguese financial market during almost ten years this paper examines the socio‐demographic characteristics of retail investors in warrants, and discusses the hypothesis that some behavioral biases do have an impact on the investors’ predisposition to invest and trade in warrants, a complex financial instrument. One finds that there is a profile of investors in warrants: younger and less educated men are more likely to invest in warrants and that overconfident, disposition‐prone and investors exhibiting a gambling attitude are more likely to invest and trade in warrants. Secondly, the gambling motive seems to be a distinguishing characteristic of investors in warrants. In other words, when investors are driven to trade in financial markets for pleasure/fun they tend to trade complex products more and to trade simple and easier to understand financial instruments less. Finally, the higher the intensity of trading the more relevant are the disposition and the gambler’s biases.info:eu-repo/semantics/publishedVersio

Home Country Bias: Does Domestic Experience Help Investors Enter Foreign Markets?

This paper investigates whether investors' domestic experience helps them enter foreign markets. We show that investors first invest in domestic securities and only some time later they invest abroad in foreign securities. We also show that investors who trade more often in the domestic market start to invest abroad earlier. Our findings suggest that the experience investors acquire while they trade in the domestic market is a key reason why active investors enter the foreign market earlier. A reason is that highly educated investors as well as investors with more financial knowledge, arguably those for whom learning by trading is the least important, do not need to trade as much in the domestic market before they start investing in foreign securities. Another reason is that investors who start investing in foreign securities are able to improve on their performance afterwards. This improvement in performance constitutes further evidence that the home country bias is costly, thereby confirming that there are gains for investors from investing abroad.Learning, home country bias, duration analysis.

Do macro-financial variables matter for european bank interest margins and profitability?

Preliminary versionThe main goal of this paper is to study the determinants of bank interest margins and profitability for some European countries in the last decade. We use a set of bank characteristics, macroeconomic and regulatory indicators as well as financial structure variables in order to explain interest margins and profitability. We evaluate whether European countries, sharing a common bond - European Monetary System membership - also share the same interest margin and profitability determinants. Beyond the usual micro variables, the paper examines whether bank size and capitalisation as well as inflation, economic growth, exchange rate policy, financial liberalisation and exchange rate turmoil, could be accepted as explanatory variables for bank performance. At the same time, we evaluate the impact of the EMS crisis of 1992/3/4 on the net interest margin and bank profitability, as well as the impact of the liberalisation of capital movements on Portuguese and Spanish banks

Do individual investors trade differently in different markets?

We investigate the hypothesis that the same investors trade differently in different financial markets. We use a proprietary data base with the transaction records of 129,461 investors for a 10-year period, and select the investors holding both stocks and warrants in the port-folio. We compare the trading behavior of investors in the stock market and in the warrant market, controlling for investors’ socio-demographic characteristics (age, occupation, edu-cation, etc.) and for investors’ behavioral biases (overconfidence, the disposition effect and pursuit of the pleasure of gambling). Even though investors are the same in both markets, our results clearly show that the soci-odemographic determinants of the trading activity in stocks and in warrants are not all the same, implying that the same investors trade stocks differently than warrants. More pre-cisely, overconfident investors have a higher warrant trading activity and a lower domestic stock trading activity, and investors pursuing gambling pleasure or prone to the disposition effect trade warrants more (but do not trade stocks more).info:eu-repo/semantics/publishedVersio

The investor in structured retail products : marketing driven or gambling oriented?

Structured retail products (SRP) are one of the most visible faces of financial innovation and are becoming increasingly popular amongst retail investors. However, there is strong consensus that retail investors’ preference for structured products is difficult to explain using the standard rational theory, those products being in general sold at a significant premium. Studying the actual trading behavior of individual investors we provide evidence consistent with the view that SRP likely offer value to some informed investors compared to other products, that product complexity is a way to complete markets and that SRP allow investors to access segments otherwise not available to them. Nonetheless, our results also suggest that the increasing popularity of SRP is deeply related to investors’ behavioral biases, particularly overconfidence and gambling. Moreover, results also show that SRP trading activity cannot be dissociated from aggressive marketing practices.info:eu-repo/semantics/publishedVersio