Stated preferences of Taiwanese investors for financial products

Abstract

Purpose

The popularity of wealth management in Taiwan has unleashed tense competition among financial advisors. Consumers are now more conscious of their financial services purchasing behavior. This paper aims to provide insights into local-specific investors’ characteristics and consumers’ financial product preferences and to introduce a different concept to identify localization-suitable products.

Design/methodology/approach

To understand customers’ preferred products, the paper examines consumers’ financial behavior by analyzing preference characteristics using data collected from Taiwanese investors. The study entailed a questionnaire designed for consumers using the stated preferences method and the multinomial and nested logit models to develop preference models for consumers’ financial products. A statistical test using the t-value, likelihood and ρ² to observe investor preference product reactions was also used.

Findings

The study finds that investors are sensitive to the rate of return on investments and performance changes in foreign currency, stock and mutual funds. An elasticity analysis and prediction of the market share among interactive products show that stock and mutual funds are strongly related and the rate of return on stock undoubtedly influences the market.

Originality/value

The stated preference method and inclusion of risk appetite improve our understanding of consumer choice and investors’ financial product preferences and characteristics. The results provide suitable localization product suggestions for financial institutions to help them understand their customers’ behaviors better. This paper’s results are also useful in the context of smart financial services such as financial robot technology.

Citation

Liu, C.-W. and Deng, C. (2019), "Stated preferences of Taiwanese investors for financial products", Qualitative Research in Financial Markets, Vol. 11 No. 4, pp. 411-428. https://doi.org/10.1108/QRFM-06-2018-0079