Financial Advice and Bank Profits
Journal
Review of Financial Studies
ISSN
0893-9454
ISSN-Digital
1465-7368
Type
journal article
Date Issued
2018-11
Author(s)
Abstract (De)
We use a unique data set from a large retail bank containing internal managerial Accounting data on revenues and costs per client to analyze how banks and their financial advisors generate profits with customers. We find that advised transactions are associated with higher profits than independently executed trades of the same client. The bank’s own mutual funds and structured products are most profitable for the bank, and profits increase with trade size. We show that advisors recommend exactly those transactions. Furthermore, we find that advised clients achieve a worse performance than independent clients, suggesting that advisors put their employer’s interest first.
Language
English
Keywords
bank profits
financial advice
conflicts of interest
structured products
HSG Classification
contribution to scientific community
Refereed
Yes
Publisher
Oxford University Press
Volume
31
Number
11
Start page
4447
End page
4492
Division(s)
Eprints ID
255614
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__SV-MONK_UNISG-Rfolder$_nschaub_Desktop_FinancialAdviceAndBankProfits.pdf
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3.1 MB
Format
Adobe PDF
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