Is Proprietary Trading Detrimental to Retail Investors?

• 成果类型: Article
• 署名作者: Fecht, Falko; Hackethal, Andreas; Karabulut, Yigitcan
• 署名单位: Frankfurt School Finance & Management; Goethe University Frankfurt; Erasmus University Rotterdam - Excl Erasmus MC; Erasmus University Rotterdam; Center for Economic & Policy Research (CEPR)
• 刊物名称: JOURNAL OF FINANCE
• ISSN/ISSBN: 0022-1082
• DOI: 10.1111/jofi.12609
• 发表日期: 2018
• 页码: 1323-1361
• 关键词: CONFLICTS-OF-INTEREST; COMMERCIAL-BANKS; INFORMATION; price; BEHAVIOR; returns; credibility; performance; liquidity; ADVISERS

摘要

We study the conflict of interest that arises when a universal bank conducts proprietary trading alongside its retail banking services. Our data set contains the stock holdings of every German bank and those of their corresponding retail clients. We investigate (i) whether banks sell stocks from their proprietary portfolios to their retail customers, (ii) whether those stocks subsequently underperform, and (iii) whether retail customers of banks engaging in proprietary trading earn lower portfolio returns than their peers. We present affirmative evidence for all three questions and conclude that proprietary trading can, in fact, be detrimental to retail investors.