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MiFID questionnaires came into force in November 2007, and provide the ideal opportunity for a natural field experiment to analyze how the attitude of retail investors towards financial information affects their trading activity. This study uses a random matching procedure that controls for sociodemographics, financial experience, education and various MiFID answers to analyze the trading characteristics of investors who only differ from others in their “appetite for information”. We explore the hypothesis that the investors who voluntarily ask for financial information are de facto revealing a particular characteristic that may be indicative of their trading behavior. The results show that the investors who display an appetite for information tend to make smarter investments than their counterparts. Information-hungry investors execute fewer day trades, are less prone to the disposition effect, hold better quality and more diversified portfolios, and are more active on “complex” instruments. Ultimately, they earn higher (risk-adjusted) returns.

The evolution of online investing has been astonishing over the last two decades. More than ever, retail investors have their fate in their hands. They enjoy easy access to an extremely large variety of financial products which can sometimes be highly complicated and risky. To separate the wheat from the chaff, retail investors are left with limited resources in terms of skills, time, and wealth, and some of them opt for a passive investment strategy based on low-cost financial instruments, such as exchange-traded funds (ETFs). This doctoral dissertation consists of three essays about passive ETFs and retail investors using both trading records and survey-based data. The first essay shows that retail investors who trade passive ETFs are more sophisticated than those who do not. The second essay shows that passive ETF retail investors show different trading behaviors than individual stock investors. They have better understanding of diversification, have a larger portfolio size, lower turnover, hold their assets for longer periods of time and are less willing to trade lottery-like stocks. The third essay shows that heavy passive ETFs investors trade more passively. The portfolio total and systematic risks are lower for passive ETF investors, while risk-adjusted performance is negative but still higher than investors who trade individual stocks only. (ECGE - Sciences économiques et de gestion) -- UCL, 2022

Negative interest rates (NIRs) is unprecedented monetary policy that turns standard finance on its head. Since it turns standard finance at its head, the borrowers receive a reward for taking credits, and depositors have to pay for being patient and delaying their consumption. The main goal of this monetary policy is to stimulate economic growth and consumption by promoting both risk-taking and spending. Since its implementation, there is a growing body of literature studying its effectiveness. While examining its effectiveness, this literature focuses on various stakeholders touched by this monetary policy, including banks, institutional investors, and retail investors. In this thesis, we provide four experimental papers on how NIRs impact individuals’ behavior. We provide a general introduction in Chapter 1. Next, Chapter 2 investigates people’s willingness to accept NIRs by analyzing their intertemporal preferences using an online experiment. We show that people are willing to tolerate negative interest rates on their savings. We find that this tolerance strongly depends on the amount of money and time horizon. Finally, we show that it also depends on whether an individual is a regular saver or not and whether he is anchored with NIRs or positive interest rates (PIRs) first. Chapter 3 focuses on the impact of PIRs, NIRs, and procedures and costs on status quo bias in the context of savings. This status quo bias refers to the increased probability of one option being chosen when framed as status quo than when it is not framed as status quo. Using an online experiment, we find that the status quo bias is lower with NIRs than with PIRs. Next, we obtain that this status quo bias increases when one must go through procedures and pay costs to shift from the status quo to another alternative. Finally, we find that highly financially literate individuals show lower bias towards the status quo than their less financially literate counterparts. In Chapter 4, we study the impact of positive and negative nominal interest rates on money illusion for an individual’s savings and investment decisions. This money illusion occurs when individuals think in nominal rather than real terms while making decisions. We find that individuals facing negative nominal interest rates show a lower money illusion than individuals facing positive nominal interest rates. Financial literacy is linked negatively with the money illusion, i.e., individuals who are more financially literate show a lower money illusion than their less financially literate counterparts. Chapter’s 5 goal is to test whether it is the zero interest rate level or the target return that impacts the risk-taking behavior of individuals in investment decisions. We set either a low or a high target return in our experiment and demand participants to make several independent investment decisions when the risk-free rate fluctuates around the target return. For some participants, it turns out negative. We find that the prevailing reference point is the target return, whatever the risk-free rate level. Our results also suggest that the target return serves as the prevailing reference point when the risk-free rate turns out negative. Chapter 6 reports a general conclusion. (ECGE - Sciences économiques et de gestion) -- UCL, 2022