On the Impact of Regulating Commissions : Evidence from the Indian Mutual Funds Market

Commissions-motivated agents have historically helped the development of many markets, but research suggests brokers motivated by commissions sometimes steer consumers towards inappropriate products. This issue is particularly important in household financial markets where consumers may be unable to...

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Bibliographic Details
Main Authors:	Santosh, Anagol, Marisetty, Vijaya, Sane, Renuka, Buvaneshwaran, Venugopal
Format:	Journal Article
Published:	Published by Oxford University Press on behalf of the World Bank 2018
Subjects:	DEVELOPMENT FINANCIAL MARKETS SAVINGS CAPITAL INVESTMENT GOVERNMENT POLICY REGULATION BANKING MUTUAL FUNDS INVESTOR PROTECTION FINANCIAL CONSUMER PROTECTION COMMISSIONS
Online Access:	http://hdl.handle.net/10986/30136

id	okr-10986-30136
recordtype	oai_dc
spelling	okr-10986-301362021-05-25T10:54:40Z On the Impact of Regulating Commissions : Evidence from the Indian Mutual Funds Market Santosh, Anagol Marisetty, Vijaya Sane, Renuka Buvaneshwaran, Venugopal DEVELOPMENT FINANCIAL MARKETS SAVINGS CAPITAL INVESTMENT GOVERNMENT POLICY REGULATION BANKING MUTUAL FUNDS INVESTOR PROTECTION FINANCIAL CONSUMER PROTECTION COMMISSIONS Commissions-motivated agents have historically helped the development of many markets, but research suggests brokers motivated by commissions sometimes steer consumers towards inappropriate products. This issue is particularly important in household financial markets where consumers may be unable to evaluate products on their own. While reforms attempting to limit commission payments have been undertaken worldwide, little research has evaluated the impact of these reforms. We study a major Indian investor protection reform that attempted to reduce commissions tied to mutual fund sales by banning the distribution fees that mutual funds had previously earmarked for commissions. We analyze the policy impact by comparing funds charging high versus low distribution fees pre-reform and find no evidence that the reform itself reduced fund flows. We argue that the most plausible explanation is that the Indian asset management industry maintained substantial commissions to brokers through other revenue sources apart from the banned distribution fees. 2018-08-03T20:42:17Z 2018-08-03T20:42:17Z 2017-02 Journal Article World Bank Economic Review 1564-698X http://hdl.handle.net/10986/30136 CC BY-NC-ND 3.0 IGO http://creativecommons.org/licenses/by-nc-nd/3.0/igo World Bank Published by Oxford University Press on behalf of the World Bank Publications & Research :: Journal Article Publications & Research South Asia India
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
topic	DEVELOPMENT FINANCIAL MARKETS SAVINGS CAPITAL INVESTMENT GOVERNMENT POLICY REGULATION BANKING MUTUAL FUNDS INVESTOR PROTECTION FINANCIAL CONSUMER PROTECTION COMMISSIONS
spellingShingle	DEVELOPMENT FINANCIAL MARKETS SAVINGS CAPITAL INVESTMENT GOVERNMENT POLICY REGULATION BANKING MUTUAL FUNDS INVESTOR PROTECTION FINANCIAL CONSUMER PROTECTION COMMISSIONS Santosh, Anagol Marisetty, Vijaya Sane, Renuka Buvaneshwaran, Venugopal On the Impact of Regulating Commissions : Evidence from the Indian Mutual Funds Market
geographic_facet	South Asia India
description	Commissions-motivated agents have historically helped the development of many markets, but research suggests brokers motivated by commissions sometimes steer consumers towards inappropriate products. This issue is particularly important in household financial markets where consumers may be unable to evaluate products on their own. While reforms attempting to limit commission payments have been undertaken worldwide, little research has evaluated the impact of these reforms. We study a major Indian investor protection reform that attempted to reduce commissions tied to mutual fund sales by banning the distribution fees that mutual funds had previously earmarked for commissions. We analyze the policy impact by comparing funds charging high versus low distribution fees pre-reform and find no evidence that the reform itself reduced fund flows. We argue that the most plausible explanation is that the Indian asset management industry maintained substantial commissions to brokers through other revenue sources apart from the banned distribution fees.
format	Journal Article
author	Santosh, Anagol Marisetty, Vijaya Sane, Renuka Buvaneshwaran, Venugopal
author_facet	Santosh, Anagol Marisetty, Vijaya Sane, Renuka Buvaneshwaran, Venugopal
author_sort	Santosh, Anagol
title	On the Impact of Regulating Commissions : Evidence from the Indian Mutual Funds Market
title_short	On the Impact of Regulating Commissions : Evidence from the Indian Mutual Funds Market
title_full	On the Impact of Regulating Commissions : Evidence from the Indian Mutual Funds Market
title_fullStr	On the Impact of Regulating Commissions : Evidence from the Indian Mutual Funds Market
title_full_unstemmed	On the Impact of Regulating Commissions : Evidence from the Indian Mutual Funds Market
title_sort	on the impact of regulating commissions : evidence from the indian mutual funds market
publisher	Published by Oxford University Press on behalf of the World Bank
publishDate	2018
url	http://hdl.handle.net/10986/30136
_version_	1764471298505834496

On the Impact of Regulating Commissions : Evidence from the Indian Mutual Funds Market

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