Fintech Thrust Seminar | Evolution of Polarization in Perceived Risk
Evolution of Polarization in Perceived Risk
Abstract:
Using customer data from a large fintech offering “guaranteed” certificates of deposits, we document considerable heterogeneity in offered interest rates for the same currency, the same country and the same maturity for such a simple and virtually riskless product. We find that 11% of investors regard these products as riskless and always go for the highest yield, but 67% never do. Of the others, the probability of choosing the highest interest rate product increases over time, implying that risk perceptions decrease when no default is observed.
Utpal Bhattacharya, Chair Professor of Finance, Hong Kong University of Science and Technology, Hong Kong
Professor Bhattacharya received his Bachelors in Mechanical Engineering from the Indian Institute of Technology, Kanpur, in 1980; an M.B.A. from the Indian Institute of Management, Ahmedabad, in 1982; and his Ph.D. in Finance from Columbia University in 1990. He joined HKUST in 2014.
Professor Bhattacharya's research is about the dark side of financial markets. He believes, with apologies to Thomas Jefferson, that "the price of capitalism is eternal vigilance."
Professor Bhattacharya was the Executive Editor of Financial Management, 2016-2022, where he succeeded in tripling its citation impact factor. He was an Associate Editor of the Review of Financial Studies and the Journal of Financial Markets. His publications have appeared in all the top-tier finance journals (Journal of Finance, Journal of Financial Economics, The Review of Financial Studies, Journal of Financial and Quantitative Analysis and the Journal of Business), top-tier accounting journals like The Accounting Review, and top-tier economics journals like the Journal of Economic Theory, Journal of Law and Economics and the Journal of Monetary Economics.
Professor Bhattacharya's research has been featured in full-length stories more than a hundred times in various media across the world, including six times in the Economist. He wrote a satire about the legendary fraudster Madoff in the New York Times. He has been invited to present his research in 236 institutions in 35 countries in 5 continents. He wrote a report for and served as a member of the "Task Force to Modernize Securities Regulation in Canada" in 2006. He and his report were featured in a Canadian Broadcasting Corporation investigative story titled "Who Is Guarding Your Money" on November 23, 2008. On December 2, 2008, legislators in Ontario, Canada, discussed this report. On May 16, 2012, the Securities and Exchange Commission of the U.S. invited him to present the findings of his Journal of Finance paper that documents cross-subsidies in mutual fund families. He is now an official whistleblower.
Prof. Bhattacharya is an excellent teacher. He was nominated for the Trustee Teaching Award by Indiana University five years in a row. He won in 2004 and 2008. In 2006, Business Week recognized him as a "prominent faculty." Prof. Bhattacharya teaches in a different country or region almost every summer. He has taught at top universities in Argentina, Brazil, China, Colombia, Finland, France, Germany, India, Indonesia, Ireland, Italy, Japan, Lithuania, Mexico, Netherlands, New Zealand, Portugal, Singapore, Slovenia, South Korea, Russia, Taiwan, Turkey, U.K., U.S.A. (Chicago, Duke and MIT) and Vietnam.
His goal is to spread the gospel of honest finance to every corner of the globe.