This paper examines the influence of fund flow on fund performance in US domestic equity funds from 1993 to 2008. We find that fund flow has an asymmetric influence on fund performance. Inflow will significantly push up simultaneous fund performance, whereas outflow does not significantly result...

The paradox of monetary profits has been a recurrent theme in macroeconomics since the problem was first formulated by Marx. Capitalists as a whole can at most get from workers, what they already paid out in wages. Marx did not solve this problem, and neither did Keynes, who had to face the...

This paper studies the effect of new fund flows on investment behavior and the resulting equilibrium price of risk. The Small Fund Industry model shows equilibria with overinvestment in unprofitable and underinvestment in profitable investment opportunities. The Large Fund Industry model derives...

Some financial supervisors worry that liquidity transformation within the “shadow banking” sector might threaten financial stability. For example, a mutual fund promising overnight liquidity based on illiquid assets (such as corporate bonds) runs the risk of needing to “fire sale” some...

The paradox of monetary profits has been a recurrent theme in macroeconomics since the problem was first formulated by Marx. Capitalists as a whole can at most get from workers, what they already paid out in wages. Marx did not solve this problem, and neither did Keynes, who had to face the...