The MIFID II regulation and scope for motivated sustainability investments

Last registered on December 06, 2023
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Pre-Trial

Trial Information

General Information

Title
The MIFID II regulation and scope for motivated sustainability investments
RCT ID
AEARCTR-0012566
Initial registration date
November 29, 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
December 06, 2023, 8:18 AM EST

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

Locations

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Primary Investigator

Name
Fabian Braun
Affiliation
Johannes Gutenberg University Mainz / Leibniz Institute for Financial Research SAFE
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Other Primary Investigator(s)

PI Name
Andrej Gill
PI Affiliation
Johannes Gutenberg University Mainz
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PI Name
Florian Hett
PI Affiliation
Johannes Gutenberg University Mainz
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Additional Trial Information

Status
In development
Start date
2023-11-30
End date
2024-12-31
Keywords
Behavior, Environment & Energy, Finance & Microfinance
Additional Keywords
sustainable finance regulation; motivated beliefs; ESG
JEL code(s)
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
Abstract
This study is driven by the implications of the recent MIFID II regulation, which requires financial advisors to consider their clients' sustainability preferences and tailor investment recommendations accordingly. The central aim of our research is to examine the extent to which MIFID II allows for motivated reasoning when selecting sustainable investments. Specifically, we investigate if investors' assessment of sustainability criteria is influenced by the potential for financial gains. We conduct an incentivized online experiment on Prolific with 800 participants. Our results shed light on the effectiveness of the MIFID II regulation in capturing sustainability preferences.
External Link(s)

Registration Citation

Citation
Braun, Fabian, Andrej Gill and Florian Hett. 2023. "The MIFID II regulation and scope for motivated sustainability investments." AEA RCT Registry. December 06. https://doi.org/10.1257/rct.12566-1.0
Sponsors & Partners
Experimental Details

Interventions

Intervention(s)
We employ a between-subject design. We exogenously vary (1) the ability of investors to choose sustainability criteria for their investments and (2) the correlation between expected financial returns of ETFs and selected sustainability criterion.
Intervention Start Date
2023-11-30
Intervention End Date
2023-12-03

Primary Outcomes

Primary Outcomes (end points)
- The assessment of the sustainability criteria 'alignment with the 2°C climate goal'.
- Indicator variable that is set to one if an investor selects the 'alignment with the 2°C climate goal' as the most important sustainability indicator, and zero otherwise.
Primary Outcomes (explanation)
We expect the assessment of the 'alignment with the 2°C climate goal' criterion, as well as the share of investors prioritizing this as the most important sustainability criterion, will be higher in the treatment where expected returns positively correlate with meeting the 'alignment with the 2°C climate goal.' We expect that this effect will be stronger for investors who can select the sustainability criterion (filter treatment).

Secondary Outcomes

Secondary Outcomes (end points)
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
Online experiment via prolific. Between-subject design.
Experimental Design Details
Not available
Randomization Method
Software (for treatment assignment and random draws of selected participants)
Randomization Unit
individual
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
800 participants
Sample size: planned number of observations
800 participants
Sample size (or number of clusters) by treatment arms
200 individuals per treatment arm.
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Supporting Documents and Materials
IRB

Institutional Review Boards (IRBs)

IRB Name
Joint Ethics Committee of the Faculty of Economics and Business Administration of Goethe University Frankfurt and the Gutenberg School of Management & Economics of the Faculty of Law, Management and Economics of Johannes Gutenberg University Mainz
IRB Approval Date
2023-09-13
IRB Approval Number
N/A.
Analysis Plan

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