Discussion paper

DP18173 FinTech, investor sophistication and financial portfolio choices

This paper analyses the links between advances in financial technology, investors’ sophistication, and the composition and returns of their financial portfolios. We develop a simple portfolio choice model under asymmetric information and derive some theoretical predictions. Using detailed microdata from Banca d’Italia, we test these predictions for Italian households over the period 2004-20. In general, heterogeneity in portfolio composition and in returns between sophisticated and unsophisticated investors grows with improvements in financial technology. This heterogeneity is reduced only if financial technology is accessible to everyone and if investors have a similar capacity to use it.


Gambacorta, L, R Gambacorta and R Mihet (2023), ‘DP18173 FinTech, investor sophistication and financial portfolio choices‘, CEPR Discussion Paper No. 18173. CEPR Press, Paris & London. https://cepr.org/publications/dp18173