Payment methods and the disposition effect: Evidence from Indonesian mutual fund trading

Aldo Fortunato Dalla Costa, Vito Mollica, Abhay Singh

Research output: Contribution to journalArticlepeer-review

Abstract

This paper investigates the link between payment methods used by investors in mutual funds and the tendency with which investors realize gains earlier than losses — the disposition effect. We utilize a proprietary dataset detailing investor trading accounts in Indonesian mutual funds, whom are permitted to buy and sell securities in exchange for cash or other assets. These two payment methods are economically equivalent in value and cost; however, differ in payment saliency. We find that more salient payment methods are associated with a higher disposition effect and vice versa, less salient payments are associated with a smaller tendency to realize gains more readily than losses.
Original languageEnglish
Article number100503
Pages (from-to)1-11
Number of pages11
JournalJournal of Behavioral and Experimental Finance
Volume30
DOIs
Publication statusPublished - Jun 2021

Keywords

  • Disposition effect
  • Payment methods
  • Saliency

Fingerprint Dive into the research topics of 'Payment methods and the disposition effect: Evidence from Indonesian mutual fund trading'. Together they form a unique fingerprint.

Cite this