The Test And Explanation Of The Market Share Trap Of Chinese Fund Families

With the rapid development of China's fund business,the fund family has become the most important form of management in the fund market.Although the overall asset size of China's public offering funds continues to grow,the fund family is experiencing the challenges of rising costs and weakening profitability.The relationship between market share and corporate profitability has always been one of the focal issues in the discipline of economic management.The market share of the fund family's products represents its competitiveness and market position.When the fund family uses expanding market shares to improve the performance of the fund family and make the market share reach a certain level,does the market share's role in increasing family profits gradually weaken? In order to study this problem,this article innovatively proposes the concept of "market share trap" for funds,theoretically derivates and empirically tests the existence of this phenomenon and attempts to explain the phenomenon,and explores the factors affecting the market share of funds and their causes.The so-called "market share trap" refers to the phenomenon that when the market share of an enterprise reaches a certain scale and continues to expand its market share,the increase in the profit of the enterprise is slowed down or even caused the profit to decline.Based on the semi-annual data of 48 fund families in China from 2006 to 2018,this paper uses the fixed effect panel model and the panel threshold regression model to study the nonlinear relationship between fund family market share and fund family performance,test the existence of “market share trap”,and explain the cause of this phenomenon from the perspective of the size of the fund products and the ratio of expenditures.The empirical results show that there is a single threshold effect on the market share of the fund family.When the market share is less than the threshold,the market share expansion will bring about a substantial increase in family performance.When the market share is greater than the threshold,the performance improvement effect has been greatly weakened,which proves the existence of the “market share trap”;further analysis finds that the scale of the fund products and the expense ratio have a threshold effect,which explains to some extent the cause of the“market share trap”.The conclusions are still valid after a series of robustness tests.This paper has important implications for the relevant departments to formulate fund supervision strategies and fund family market share competition strategies.The fund family should avoid falling into the “market share trap” when pursuing market share expansion.