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Economic Modeling White Papers

Do Financial Institutions Matter?

Overview In standard asset pricing theory, investors are assumed to invest directly in financial markets. The role of financial institutions is ignored. The focus in corporate finance is on agency problems. How do you ensure that managers act in shareholders’ interests? There is an inconsistency in assuming that when you give your money to a financial institution there is no agency problem but when you give it to a firm there is. It is argued both areas need to take proper account of the role of financial institutions and markets. Appropriate concepts for analyzing particular situations should be used.

Further White Paper Details
Publisher	University of Pennsylvania	File Format	PDF, requires Acrobat Rdr 5
Date Published	February 2001	Downloads	4
Format	White Papers
Topics	Economic Modeling, Online Trading

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