Mon, Dec 29, 2014
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Increasing capital markets' size could compensate for post-financial crisis decline in bank lending, says new paper

Thursday, March 20, 2014
Opalesque Industry Update - Capital markets are significant drivers of economic growth and increasing their size could compensate for the post-financial crisis decline in bank lending, according to new research by two leading academics commissioned by AIMA, the global hedge fund industry association.

Growing capital markets by one-third could fuel a long-term real growth rate in per-capita GDP of around 20%, according to original research outlined in a new paper* by Christoph Kaserer, Professor of Finance, Chair of Financial Management and Capital Markets, TUM School of Management, Munich, and Marc Steffen Rapp, Professor of Finance, Accounting & Finance Group, School of Business and Economics, Philipps-Universität Marburg, Germany.

The new research finds that capital markets support economic growth by providing new sources of funding for long-term investment and facilitating improvements in corporate governance. It goes on to link activities by pension funds, non-bank lenders and active investors such as hedge funds to growth in the real economy. Capital markets comprise stock and bond markets and capital markets activity includes both debt and equity financing.

The paper also reveals the extent to which economies traditionally regarded as bank-based have embraced capital markets in recent years and suggests that the old distinctions between the bank-based economic structure of parts of Europe and the more market-based structure of the UK and US are rapidly disappearing.

Jack Inglis, AIMA CEO, said: “This is an important and timely paper which underlines the strong role that capital markets and their participants play in driving economic growth and prosperity. It highlights the positive role that hedge funds and asset managers in general can play, using their expertise and willingness to create positive governance changes in the firms in which they invest. Hedge funds are important providers of liquidity, risk management and price discovery in capital markets.

“Although the paper takes as an example the economies of the European Union, it shows how governments globally can benefit from a well-developed capital markets policy. This is especially true for countries where a bank-based economic model still dominates. Bank lending clearly is not keeping pace with demand and the global economic recovery could be jeopardised unless new sources of financing can be found, particularly from the investment management community. We would therefore encourage governments globally to implement policies that help to protect and grow capital markets.”

Press release

*‘Capital Markets and Economic Growth – Long-Term Trends and Policy Challenges’, by Christoph Kaserer and Marc Steffen Rapp. To download a copy, click here: Source

To download an AIMA position paper on the research, click here: Source

Bg

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Hong Kong-Shanghai stock link fails to live up to expectation so far[more]

    Komfie Manalo, Opalesque Asia: In a report, Reuters said that demand has been subdued with the bulk of activities coming from short-term speculative investors. Las

  2. North America - Why Steve Cohen, Connecticut hedge fund billionaire, gives so much in New York[more]

    From Insidephilantrophy.com: Billionaire Steve Cohen was born in Great Neck, New York before attending Wharton, working on Wall Street and then founding SAC Capital Advisors in Connecticut. Though his company (Point72) and foundation are based in Connecticut, Cohen and Alexandra are deeply connected

  3. Investing - Soros buys a highly speculative biotech in the third quarter[more]

    From Fool.com: …The Soros Fund bought 25,000 shares of the struggling small-cap biopharma Aegerion Pharmaceuticals in the third quarter. For those of you who haven't heard of this name, suffice to say that this was a surprising buy in light of the company's recent problems and poor outlook going for

  4. CFTC Revokes Registrations of Illinois Resident Aleks A. Kins and Chicago-based AlphaMetrix, LLC[more]

    Matthias Knab, Opalesque: The U.S. Commodity Futures Trading Commission (CFTC) today announced that it has revoked the registration of Aleks A. Kins of Chicago, Illinois, as an Associated Person and the registrations of AlphaMetrix, LLC (AlphaMetrix), a Delaware limited liability company with its

  5. Duff & Phelps acquires asset management consulting firm Kinetic Partners[more]

    Komfie Manalo, Opalesque Asia: Global valuation and corporate finance advisor Duff & Phelps Corporation and asset management consulting firm Kinetic Partners have s