IDEAS home Printed from https://ideas.repec.org/p/cnv/wpaper/dt_43en.html
   My bibliography  Save this paper

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

Author

Listed:
  • 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

    Download full text from publisher

    File URL: http://www.cnmv.es/DocPortal/Publicaciones/MONOGRAFIAS/DT43_weben.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Paul Klemperer, 1995. "Competition when Consumers have Switching Costs: An Overview with Applications to Industrial Organization, Macroeconomics, and International Trade," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 62(4), pages 515-539.
    2. Malmendier, Ulrike & Shanthikumar, Devin, 2007. "Are small investors naive about incentives?," Journal of Financial Economics, Elsevier, vol. 85(2), pages 457-489, August.
    3. Jean-Jacques Laffont & Jean Tirole, 1993. "A Theory of Incentives in Procurement and Regulation," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121743, April.
    4. Dow, James & Werlang, Sergio Ribeiro da Costa, 1992. "Uncertainty Aversion, Risk Aversion, and the Optimal Choice of Portfolio," Econometrica, Econometric Society, vol. 60(1), pages 197-204, January.
    5. Paul A. Samuelson, 2011. "Lifetime Portfolio Selection by Dynamic Stochastic Programming," World Scientific Book Chapters, in: Leonard C MacLean & Edward O Thorp & William T Ziemba (ed.), THE KELLY CAPITAL GROWTH INVESTMENT CRITERION THEORY and PRACTICE, chapter 31, pages 465-472, World Scientific Publishing Co. Pte. Ltd..
    6. John Vickers & George Yarrow, 1988. "Privatization: An Economic Analysis," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262720116, April.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Anastassios Gentzoglanis, 2002. "Privatization, Investment and Efficiency in the Telecommunications Industry: Theory and Empirical Evidence from MENA Countries," Working Papers 0230, Economic Research Forum, revised 10 Oct 2002.
    2. Huirong Liu, 2020. "Housing Investment, Stock Market Participation and Household Portfolio choice: Evidence from China's Urban Areas," Papers 2001.01641, arXiv.org.
    3. Ornella Tarola, 2010. "Public Utilities: Privatization without Regulation," Czech Economic Review, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, vol. 4(1), pages 062-078, March.
    4. Michael A. Crew & Paul R. Kleindorfer, 2013. "Privatization of postal operators: old arguments and new realities," Chapters, in: Michael A. Crew & Paul R. Kleindorfer (ed.), Reforming the Postal Sector in the Face of Electronic Competition, chapter 1, pages 1-19, Edward Elgar Publishing.
    5. Chen, Ruiyuan & El Ghoul, Sadok & Guedhami, Omrane & Wang, He, 2017. "Do state and foreign ownership affect investment efficiency? Evidence from privatizations," Journal of Corporate Finance, Elsevier, vol. 42(C), pages 408-421.
    6. Evans, Lewis, 1998. "The Theory and Practice of Privatisation," Working Paper Series 3936, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    7. Boudreaux, Christopher, 2019. "Do private enterprises outperform state enterprises in an emerging market? The importance of institutional context in entrepreneurship," MPRA Paper 93039, University Library of Munich, Germany.
    8. Saul Estrin & Jan Hanousek & Evzen Kocenda & Jan Svejnar, 2009. "The Effects of Privatization and Ownership in Transition Economies," Journal of Economic Literature, American Economic Association, vol. 47(3), pages 699-728, September.
    9. Jaccard, Mark, 1995. "Oscillating currents : The changing rationale for government intervention in the electricity industry," Energy Policy, Elsevier, vol. 23(7), pages 579-592, July.
    10. Elisa BORGHI & Chiara DEL BO & Massimo FLORIO, 2010. "The theory of public enterprise, social welfare and planning: a note," Departmental Working Papers 2010-20, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    11. Kenneth Button, 2016. "Public--private partnerships: a review of economic considerations with particular reference to transportation projects," Transportation Planning and Technology, Taylor & Francis Journals, vol. 39(2), pages 136-161, March.
    12. Evans, Lewis, 1998. "The Theory and Practice of Privatisation," Working Paper Series 19035, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    13. Johannes M. Bauer, 2005. "Regulation and state ownership: conflicts and complementarities in eu telecommunications," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 76(2), pages 151-177, June.
    14. Ang, Andrew & Bekaert, Geert & Liu, Jun, 2005. "Why stocks may disappoint," Journal of Financial Economics, Elsevier, vol. 76(3), pages 471-508, June.
    15. Florencio López-de-Silanes, 1997. "Determinants of Privatization Prices," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(4), pages 965-1025.
    16. Wagner, Stephan M. & Friedl, Gunther, 2007. "Supplier switching decisions," European Journal of Operational Research, Elsevier, vol. 183(2), pages 700-717, December.
    17. repec:vuw:vuwscr:19035 is not listed on IDEAS
    18. Wolf, Christian, 2009. "Does ownership matter? The performance and efficiency of State Oil vs. Private Oil (1987-2006)," Energy Policy, Elsevier, vol. 37(7), pages 2642-2652, July.
    19. Emmanuelle Auriol & Pierre M. Picard, 2008. "Infrastructure and Public Utilities Privatization in Developing Countries," The World Bank Economic Review, World Bank, vol. 23(1), pages 77-100, November.
    20. Yacine AÏT‐SAHALI & Michael W. Brandt, 2001. "Variable Selection for Portfolio Choice," Journal of Finance, American Finance Association, vol. 56(4), pages 1297-1351, August.
    21. Ohlsson, Henry, 1996. "Ownership and input prices: A comparison of public and private enterprises," Economics Letters, Elsevier, vol. 53(1), pages 33-38, October.

    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

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cnv:wpaper:dt_43en. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Jose María Moreno (email available below). General contact details of provider: https://edirc.repec.org/data/cnmgves.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.