The effect of financial crisis on the flow determinants of Finnish fixed income funds

PURPOSE OF THE STUDY The objective of this study is to analyze the determinants of Finnish fixed income fund flows before and during the financial crisis of the beginning of the 21st century. The study concentrates on the differences between bank related and non-bank related fixed income fund flow determinants. The time period is divided into two subsamples, of which the first is the Pre-crisis period and the second the Crisis period. In addition, the study will examine more closely the behavior of a few selected money market funds during the financial crisis. DATA The data is gathered from Mutual Fund Reports provided by Investment Research Finland. The sample consists of all the fixed income funds registered in Finland. The flow determinants are examined monthly during a sample period of January 2004 - December 2009. RESULTS The results indicate that some of the flow determinants changed during the Crisis period but no new determinants were found. The existence of asymmetric reaction to past performance documented in the earlier literature cannot be confirmed. The findings confirm that bank related fund flows are related to performance measures during both sub- periods