Financial Media as a Money Doctor: Evidence from Refinancing Decisions Lin Hu Kun Li Australian National University Australian National University Phong T. H. Ngo Denis Sosyura Australian National University Arizona State University Abstract We find that the viewership of business television raises the propensity of households to refinance their homes when doing so is financially advantageous. To estimate the effect of business TV, we exploit the staggered entry of Fox Business Network (FBN) into zip codes across the U.S. Exposure to FBN is associated with a 14% increase in local refinancing volume in response to a 100 bps drop in mortgage interest rates. We confirm the media effect on refinancing by using an instrument for TV viewership, which exploits exogenous variation in the channels’ ordinal positions. The media influence is stronger for minority and lower-income applicants. Overall, business TV likely raises financial awareness and serves as a nudge against inertia. JEL Codes: G50, G51, G53, R20, R21 Key words: media, household finance, financial literacy, refinancing Send correspondence to Denis Sosyura, W. P. Carey School of Business, 300 E. Lemon St., P.O. Box 873906, Tempe, AZ 85287; telephone: (480) 965-4221. E-mail:
[email protected]. There is extensive evidence that households make costly financial mistakes. Given the large personal losses from these mistakes, there has been concerted effort to improve households’ financial decisions, ranging from education programs and mandatory counselling to increased disclosure and even robo- advice. Yet, changing household behavior has proven difficult, and the efficacy of most proposed policies has been modest despite their significant costs (see DellaVigna (2009) for a review).