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Measuring the costs of short-termism

  • Davies, Richard
  • Haldane, Andrew G.
  • Nielsen, Mette
  • Pezzini, Silvia

A potential cost of modern capital markets is short-termism, with agents in the financial intermediation chain weighing near-term outcomes too heavily at the expense of longer-term opportunities and thus forgoing valuable investment projects and potential output. This paper sets out an analytical framework and empirical estimates of the potential costs of short-termism arising from distortions to the cost of capital and investment intentions.

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Article provided by Elsevier in its journal Journal of Financial Stability.

Volume (Year): 12 (2014)
Issue (Month): C ()
Pages: 16-25

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Handle: RePEc:eee:finsta:v:12:y:2014:i:c:p:16-25
Contact details of provider: Web page: http://www.elsevier.com/locate/jfstabil

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