Essays on retail investor's behavior

This PhD dissertation is anchored in the behavioral finance field of research. In this thesis, we investigate the behavior of retail investors in a MiFID (Markets in Financial Instruments Directive) context. More precisely, throughout the three essays that compose this thesis, we investigate the extent to which several aspects of the retail investors’ behavior are related to the level of financial literacy they report in the so-called MiFID tests. In the first essay, we address the informative content of the MiFID tests. We provide evidence that the level of financial literacy self-reported in the MiFID tests help explain the general trading behavior characterized along three different aspects: Experience and familiarity with financial markets, diversification and performance. In the second essay, we investigate the retail investors’ exposure to the language effect. Our results show that when they decide to invest abroad, the investors under scrutiny tend to invest more in stocks listed in a country sharing the same language. We also find that this language effect is reduced for the investors who report higher levels of financial literacy. In the last essay, we analyze whether the investors who reveal appetite for information display a trading behavior different from the ones who neglect a free access to more financial information. Our results tend to show that those two categories of investors behave differently but consistently with their attitude towards financial information.(ECGE - Sciences économiques et de gestion) -- UCL, 201