The Impact of Finfluencers on Retail Investment

We examine the impact of financial influencers (“finfluencers”) on retail investment with detailed data from actual investment decisions in four Nordic countries. Using an instrument that randomly assigns influencers to followers, we find the following: (1) Investors tend to follow influencers with high Sharpe ratios, frequent trades, a shared country of residence or language, and male gender. (2) Influencers significantly impact their followers’ portfolio choices and trading activity. (3) This influence is particularly strong when influencers have a large follower base, occupy a central position in the social network, or actively engage in group discussions. The effect is also more pronounced among investors who follow fewer influencers, female investors, and when trading passive funds.