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Unbundling financial services: The case of brokerage and investment research

Author

Listed:
  • Sébastien Galanti

    (LEO - University of Orléans)

  • Anne-Gaël Vaubourg

    (CRIEF - University of Poitiers)

Abstract

Brokers were previously allowed to provide brokerage and financial research as a single package, but unbundling rules recently introduced in Europe now oblige them to charge separately for the two services. To analyze the effect of this regulation, we consider a theoretical duopoly model between a broker who offers a brokerage service and an investment research service and an independent analyst who offers a second investment research service. We show that unbundling rules increase the profitability and market share of the independent analyst and improve social welfare. These findings suggest that unbundling rules are relevant to the sustainability of the independent research industry.

Suggested Citation

  • Sébastien Galanti & Anne-Gaël Vaubourg, 2020. "Unbundling financial services: The case of brokerage and investment research," Economics Bulletin, AccessEcon, vol. 40(1), pages 473-484.
    • Handle: RePEc:ebl:ecbull:eb-19-00441
    as

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    References listed on IDEAS

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    More about this item

    Keywords

    analysts; brokers; independent financial research; unbundling rules; social welfare;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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