Financial education in improving decisions in financial markets: Evidence from a randomized field experiment with retail traders.

Last registered on November 18, 2023
View Trial History

Pre-Trial

Trial Information

General Information

Title
Financial education in improving decisions in financial markets: Evidence from a randomized field experiment with retail traders.
RCT ID
AEARCTR-0012467
Initial registration date
November 10, 2023

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published
November 18, 2023, 6:02 PM EST

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Locations

Country
Bangladesh
Region
Dhaka

Primary Investigator

Name
Asad Islam
Affiliation
Monash University
Contact Primary Investigator

Other Primary Investigator(s)

PI Name
Sakif Rahman
PI Affiliation
University of Rochester
Contact Investigator

Additional Trial Information

Status
Completed
Start date
2016-06-15
End date
2016-09-04
Keywords
Behavior, Education, Finance & Microfinance
Additional Keywords
Retail traders, behavioral biases, financial education
JEL code(s)
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
Abstract
Trading behavior can be influenced by biases and individual beliefs, which can significantly impact outcomes in the stock market, particularly for unsophisticated and inexperienced traders. In this study, we aim to investigate the extent to which the decisions of retail traders in financial markets are influenced by finance and stock market-related education. To explore this, we have randomly assigned traders from various brokerage firms in Dhaka, Bangladesh, to participate in a training program covering essential financial topics and stock market fundamentals. Our objective is to analyze whether and how such a financial educational initiative has impacted the decision-making process of retail traders in the stock market.
External Link(s)

Registration Citation

Citation
Islam, Asad and Sakif Rahman. 2023. "Financial education in improving decisions in financial markets: Evidence from a randomized field experiment with retail traders.." AEA RCT Registry. November 18. https://doi.org/10.1257/rct.12467-1.0
Sponsors & Partners

There is information in this trial unavailable to the public. Use the button below to request access.

Request Information
Experimental Details

Interventions

Intervention(s)
We first advertise our training program of financial education and stock market essentials. We them randomly assign a group of selected retail trader participants to take part in the training program while the rest of the participants do not receive any intervention. The training primarily included the fundamentals of stock valuation. We also used ‘rule of thumb’ method considering a large number of small investors do not have sufficient accounting knowledge. The curriculum includes Basic concepts of the stock market; Technical analysis - Understanding financial statements; Focus: Portfolio diversification and risk reduction
Intervention Start Date
2016-07-14
Intervention End Date
2016-09-04

Primary Outcomes

Primary Outcomes (end points)
Frequency and type of trades, diversification of portfolio
Primary Outcomes (explanation)
The level of portfolio diversification: The variety of stocks - number of different stock, number of different industry, the
concentration level (highest percentage of one single industry).
◦ Positive impact would imply a better portfolio diversification.
• Trading frequencies - the number/volume/value of daily purchases and sales.
◦ Positive impact would lead to LESS TRADING and more long term investment.

Secondary Outcomes

Secondary Outcomes (end points)
characteristics of stocks invested, portfolio turnover
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
Partner with stock brokerages to conduct a randomised controlled trial to understand and improve financial literacy among nonprofessional traders in Dhaka stock market. Collaborate in preparing the training materials and conducting the training.

Randomization was done at the individual level. We invited 428 traders from 8 brokerages in Dhaka for the training. We randomly selected 268 traders for the training.

Screening requirement for the account holders/traders: Not working in finance Sector; and not institutional traders /not invest through a mutual fund
Experimental Design Details
Randomization Method
randomization done in office by a computer
Randomization Unit
individual level randomization
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
It's not clustered randomization. However, the training after randomization was conducted by 8 brokerage houses.
Sample size: planned number of observations
500
Sample size (or number of clusters) by treatment arms
Total respondents: 428, and out of them 268 were randomly selected for the treatment
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Supporting Documents and Materials
IRB

Institutional Review Boards (IRBs)

IRB Name
Monash University
IRB Approval Date
2016-07-07
IRB Approval Number
CF16/1675 - 2016000871
Analysis Plan

Post-Trial

Post Trial Information

Study Withdrawal

There is information in this trial unavailable to the public. Use the button below to request access.

Request Information

Intervention

Is the intervention completed?
No
Data Collection Complete
Data Publication

Data Publication

Is public data available?
No

Program Files

Program Files
Reports, Papers & Other Materials

Relevant Paper(s)

Reports & Other Materials