Advanced Search
MyIDEAS: Login

Por qué los mercados financieros son tan ineficientes y explotadores, y una propuesta de solución

Contents:

Author Info

  • Paul Woolley

    () (Paul Woolley Centre for the Study of Capital Market Dysfunctionality)

Registered author(s):

    Abstract

    The essay offers a new understanding of how financial markets work. The key departure from conventional theory is to recognize that investors do not invest directly in securities but through agents such as fund managers. Agents have better information and different objectives than their customers (principals) and this asymmetry is shown as the source of inefficiency: mispricing, bubbles and crashes. A separate outcome is that agents are in a position to capture for themselves the bulk of the returns from financial innovations. Principal/agent problems do a good job of explaining how the global finance sector has become so bloated, profitable and prone to crisis. Remedial action involves the principals changing the way they contract with, and instruct agents. The essay ends with a manifesto of policies that pension funds and other large investors can adopt to mitigate the destructive features of delegation both for their individual benefit and to promote social welfare in the form of a leaner, more efficient and more stable finance sector.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://www.uexternado.edu.co/facecono/ecoinstitucional/workingpapers/pwoolley23.pdf
    Download Restriction: no

    Bibliographic Info

    Article provided by Universidad Externado de Colombia - Facultad de Economía in its journal Revista de Economía Institucional.

    Volume (Year): 12 (2010)
    Issue (Month): 23 (July-December)
    Pages: 55-83

    as in new window
    Handle: RePEc:rei:ecoins:v:12:y:2010:i:23:p:55-83

    Contact details of provider:
    Postal: Cra. 1 No. 12-68 Casa de las Mandolinas
    Phone: (571) 2826066 Ext. 1307
    Fax: (571) 2826066 Ext. 1304
    Email:
    Web page: http://www.economiainstitucional.com
    More information through EDIRC

    Related research

    Keywords: financial markets; principal-agent;

    Find related papers by JEL classification:

    References

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
    as in new window
    1. Fama, Eugene F, 1970. "Efficient Capital Markets: A Review of Theory and Empirical Work," Journal of Finance, American Finance Association, vol. 25(2), pages 383-417, May.
    2. Ron Bird & Harry Liem & Susan Thorp, 2010. "Hedge Fund Excess Returns Under Time-Varying Beta," Working Paper Series 9, The Paul Woolley Centre for Capital Market Dysfunctionality, University of Technology, Sydney.
    Full references (including those not matched with items on IDEAS)

    Citations

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:rei:ecoins:v:12:y:2010:i:23:p:55-83

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Paola Rodríguez).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.