Democratizing finance

: how digital investment platforms have transformed retail investors behavior

Abstract

This dissertation investigates the ways in which digital investment platforms have reshaped retail investor behavior by lowering traditional barriers to market entry and introducing new drivers of participation, risk-taking, and education. Drawing on behavioral finance theories (Prospect Theory, Modern Portfolio Theory, Efficient Market Hypothesis) and technology adoption frameworks (Technology Acceptance Model, Diffusion of Innovations), the study combines a qualitative interview with an industry expert and a quantitative survey on 200 investors. The primary objectives are to (1) assess how digital investment platforms influences market participation and asset allocation, (2) evaluate the role of perceived ease of use and usefulness in technology uptake, (3) identify gaps in financial literacy and their impact on risk exposure, and (4) explore generational differences in digital investment strategies linked to technology adoption. Key findings reveal that digital platforms significantly increase participation among younger cohorts, encourage higher allocation to volatile assets such as cryptocurrencies, and amplify speculative behavior in the absence of structured educational content. Perceived ease of use and usefulness emerge as dominant factors driving adoption, while self-directed learning through informal channels does not always translate into prudent investment decisions. The dissertation concludes that digital platforms hold great promise for democratizing finance but must integrate learning modules, AI-driven risk assessments, and hybrid advisory services to foster informed decision-making and sustainable investor engagement. These insights contribute to both academic discourse and practical platform design, offering recommendations for policymakers and financial institutions to balance innovation with investor protection and long-term market stability.

Date of Award	26 Jun 2025
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	Miguel Rita (Supervisor)