The Bank Bias: Segmentation of French Fund Families

Jondeau, Eric; Rockinger, Michael

doi:10.2139/ssrn.1727390

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The Bank Bias: Segmentation of French Fund Families

Banque de France Working Paper No. 107

41 Pages Posted: 19 Dec 2010

See all articles by Eric Jondeau

Eric Jondeau

University of Lausanne - Faculty of Business and Economics (HEC Lausanne); Swiss Finance Institute; Swiss Finance Institute

Michael Rockinger

University of Lausanne - School of Economics and Business Administration (HEC-Lausanne); Centre for Economic Policy Research (CEPR); Swiss Finance Institute

Date Written: February 2004

Abstract

In this paper, we investigate the performance-growth relation of French mutual funds. Using panel techniques, we find that capital inflows to French past top performing funds are not as strong as expected. This result suggests that there exist barriers to investment, that may come from the fact that funds are mostly managed by banks and insurance companies and that there are high switching costs for an investor to transfer cash from one financial institution to another. We call this phenomenon ''bank bias'', because investors do not diversify enough across banks' funds. Furthermore, we provide a test of our conjecture and cannot reject it.

Keywords: Mutual funds, Performance, SICAV, FCP

JEL Classification: G12, G20,G23

Suggested Citation: Suggested Citation

Jondeau, Eric and Rockinger, Georg Michael, The Bank Bias: Segmentation of French Fund Families (February 2004). Banque de France Working Paper No. 107, Available at SSRN: https://ssrn.com/abstract=1727390 or http://dx.doi.org/10.2139/ssrn.1727390