According to economic theory, financial institutions exist to correct financial market imperfections. If informational asymmetries and transaction costs decrease, recourse to the securities market should increase.
The purpose of the article is to verify if Italian households have effectively strengthened their direct link to Corporations and the Public Sector, thus reducing the intermediation role of financial institutions.
Investors either make their own investment decisions or delegate them to professional asset managers. Which choice is more popular?
The research takes into account the period 2003 – 2017 (15 years), with a special focus on the last 5 years (2013 – 2017) and to 2018, compatibly with the available data. The analysis first concerns the total market (all the Italian households); then it concerns only the affluent families.
Notwithstanding technological advances, that have reduced informational asymmetries, and increases in competition between securities dealers, that have led to a decrease in transaction costs, Italian investors increasingly prefer to delegate their portfolio decisions to professional asset managers. Financial theory postulates that, in these conditions, the opposite should happen.
The picture of investment choices by Italian households is clear but shows some contradictions. The tendency to save remains amongst the strongest in the world, but the economic recession has obviously led to a decrease in income and hence in savings.
The actual decisions taken. Italian savers express a low propensity to risk and a short time horizon while investing an increasing percentage of their wealth in corporate shares. Market sentiment plays an important role shown by the recovery of corporate bonds and the fall of bank bonds. The crisis that hit in 2008-2009 has been followed by a mistrust in the banking sector. Events of the last years have strengthened this negative feeling and indirectly confirm the preference for informal advice by friends and relatives in respect to professional advice coming from financial institutions.