From rags to riches - An explorative study of the technological influence within modern retail investor behavior

Abstract

Swedish citizens have a long background of passively investing in stocks and mutual funds. With the rise of new technologies, an ongoing surge of retail investors actively participating in the financial markets have been identified. At the same time, concerns have been raised towards the increased accessibility inherent in these technologies in terms of gamifying investments. The purpose of this study was to gain more knowledge regarding how everyday technology innovations may influence retail investor behavior and explore the responsibilities of identified stakeholders within the retail investing sphere. The theoretical framework section covered three main areas of relevance to the effect of new technologies on retail investor behavior. It explored the concept of stock market psychology, new technologies, and corporate social responsibility. This study was conducted using a qualitative methodology together with an abductive approach. Data collection consisted of interviews conducted with retail investors as well as experts and industry stakeholders. A cross-sectional research design was applied, and the interviews were analyzed by the use of the grounded theory approach. Our results and findings indicate that new technologies have made modern retail investing effortless in terms of lowering or erasing traditional barriers for retail investors managing their finances. Hence, it can eventually be summarized that new technologies have created unprecedented opportunities for retail investors to be in charge of their finances in achieving subjectively risk-adjusted returns, while at the same time creating an equal number of possibilities to be side-tracked from one’s goal as a result of the human behavioral nature. Although a general unwillingness amongst stakeholders to further regulate have been identified, awareness must still be raised regarding the challenges that identified stakeholders now face.