Explaining the demand for structured financial products: survey and field experiment evidence
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In many countries structured investment products are popular among retail investors. We explain the demand for these products using unique field data where we let subjects freely design their “favorite” structured product. Results suggest that the supply with capital protected products (guarantee certificates) might indeed be demand-driven. This does not seem to be the case for other product categories where marketing and sales practices might play a more important role. In a survey among financial practitioners we find furthermore that a demand for capital protected products can be explained by loss aversion and saving motifs, e.g. for buying a house.
KeywordsStructured financial products Capital protected products Loss aversion
JEL ClassificationD84 G11 G21 C9
We thank Ante Busic, Ji Cao, Urs Schweri and Daniel Ellersiek for their help with the preparation of this article. Financial support by the National Centre of Competence in Research “Financial Valuation and Risk Management” (NCCR FINRISK), Project 3, “Evolution and Foundations of Financial Markets”, and by the University Research Priority Program “Finance and Financial Markets” of the University of Zürich is gratefully acknowledged.
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