Anmerkungen:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments December 15, 2020 erstellt
Beschreibung:
Controversies around commission-based financial advice led many policy makers worldwideto introduce commission caps. Are these regulations effective in reducing prices offinancial products and stimulating investment? I examine these questions in the contextof mutual fund market by estimating the causal effects of regulating commissions for funddistribution. I exploit the unique institutional setting in Israel and the 2013 policy changewhen the government reduced commissions differently for different fund types. The reformled to a major decline in fund expense ratios and a consequent increase in fund flows.Funds with price-sensitive investors experienced a 35% larger inflows, in line with investorresponse to price declines. Mutual fund families introduced new funds in asset categorieswith reduced commissions. These results suggest that a reduction in distribution costs by aregulator fosters price competition, leading to significant savings for investors, reallocationof capital toward financial products and changes in market structure