The Impact of Finfluencers on Retail Investment

Abstract

Weexaminetheimpactoffinancialinfluencers(“finfluencers”)onretailinvestmentusingrealequity andderivativeinvestmentsacrossfourNordiccountries. Usinganinstrumentthatrandomlyassigns influencers to followers, we find the following: (1) Investors tend to follow influencers with high Sharpe ratios, frequent trades, a shared country of residence or language, and male gender. (2) Influencers affect followers’ portfolios and trading behavior, particularly when they have a large following, a central network position, or participate in group discussions. This effect is strongest for investors who follow fewer influencers, female investors, and when trading passive funds.

Keywords

Tags of Social Finance