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The financial institutions incentives when they place financial assets with credit risk to retail investors

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  • Ramiro Losada López

Abstract

CONTENTS: This paper analyzes the conflict of interest that exists when a financial institution issues and places a financial asset with credit risk among retail investors. Four regulatory measures are presented and analyzed in order to improve retail investors protection. It is shown that in this type of issues the most effective regulatory measure is that the supervisor sets a price cap. A close approach to this measure would be that the supervisor asks for independent valuations of the financial assets to provide investors and the supervisor itself with a well-founded opinion about the price of the issue.

Suggested Citation

  • Ramiro Losada López, 2010. "The financial institutions incentives when they place financial assets with credit risk to retail investors," CNMV Working Papers CNMV Working Papers no. 4, CNMV- Spanish Securities Markets Commission - Research and Statistics Department.
    • Handle: RePEc:cnv:wpaper:dt_43en
    as

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    File URL: http://www.cnmv.es/DocPortal/Publicaciones/MONOGRAFIAS/DT43_weben.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    conflict of interest; retail investors; regulation;
    All these keywords.

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation

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