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Noise Trading, Delegated Portfolio Management, and Economic Welfare

Dow, James - 1994

hedging reasons, some investors optimally contract with portfolio managers who may have stock-picking abilities, and portfolio … managers trade optimally given the incentives provided by this contract. Managers try, but sometimes fail, to discover … nothing,' in this sense, from 'simply doing nothing.' Because of this problem: (i) some portfolio managers trade even though …

Persistent link: https://www.econbiz.de/10012474053

Corporate Control, Portfolio Choice, and the Decline of Banking

Gorton, Gary - 1992

In the last two decades U.S. banks have become systematically less profitable and riskier as nonbank competition has eroded the profitability of banks' traditional activities. Bank failures, insignificant from 1934, the date the Glass-Steagall Act was passed, until 1980, rose exponentially in...

Persistent link: https://www.econbiz.de/10012474716

Banks as Secret Keepers

Dang, Tri Vi - 2014

Banks are optimally opaque institutions. They produce debt for use as a transaction medium (bank money), which requires that information about the backing assets - loans - not be revealed, so that bank money does not fluctuate in value, reducing the efficiency of trade. This need for opacity...

Persistent link: https://www.econbiz.de/10012458411