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Regulating Commission-Based Financial Advice: Evidence from a Natural Experiment.
- Source :
- Journal of Financial & Quantitative Analysis; May2023, Vol. 58 Issue 3, p1359-1389, 31p
- Publication Year :
- 2023
-
Abstract
- Do limitations on commissions paid to financial advisers reduce prices of financial products and stimulate investment? I examine these questions by estimating the causal effects of regulating commissions for mutual fund distribution. I exploit the unique institutional setting in Israel and the 2013 policy change when the government reduced commissions differently for different fund types. The reform led to a major decline in fund expense ratios and a consequent increase in fund flows. Funds with price-sensitive investors experienced 35% larger inflows. I interpret these results as investor responses to price competition fostered by a reduction in distribution costs. [ABSTRACT FROM AUTHOR]
Details
- Language :
- English
- ISSN :
- 00221090
- Volume :
- 58
- Issue :
- 3
- Database :
- Complementary Index
- Journal :
- Journal of Financial & Quantitative Analysis
- Publication Type :
- Academic Journal
- Accession number :
- 163518345
- Full Text :
- https://doi.org/10.1017/S0022109022000898