Sat, Jun 24, 2017
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. Legal - Bond market concerns could scuttle Paulson's Fannie-Freddie plan[more]

    From Bloomberg.com: A hedge fund proposal for freeing Fannie Mae and Freddie Mac from U.S. control is poised to face stiff opposition from investors who say it risks wrecking the mortgage-bond market. The Moelis & Co. blueprint, which firms including Paulson & Co. and Blackstone Group LP sponsored,

  2. Other Voices: Are your pricing policies and procedures for less liquid instruments adequate?[more]

    Komfie Manalo, Opalesque Asia: The unrelated position mismarking incidents that quickly precipitated the closures of both Visium Asset Management and Marinus Capital have been recent focal points for market participants, but regulatory scrutiny of valuation choices for less liquid instruments is

  3. FinTech - AI hedge fund Numerai now live on Ethereum, Cryptocurrency hedge funds generate huge returns as bitcoin surges[more]

    AI hedge fund Numerai now live on Ethereum From Cryptoninjas.net: Back in February, Numerai announced numeraire (NMR), a cryptographic token to incentivize a new kind of hedge fund built by a network of data scientists. Earlier today, the Numeraire smart contract was officially deployed

  4. Investing - Advisors slash hedge fund positions, Theravance Biopharma is a top pick of investment guru Seth Klarman, As asset management industry grows a search for new revenue streams[more]

    Advisors slash hedge fund positions From Barrons.com: Financial advisors have cut wealthy clients' exposure to hedge funds by up to one third over the past 12 months, The Financial Times reports. Advisor firms in the FT's annual top-300 ranking have reduced their hedge fund allocation to

  5. Barclay Hedge Fund index gains 0.50% in May, 4.13% YTD[more]

    Hedge funds gained 0.50% in May according to the Barclay Hedge Fund Index compiled by BarclayHedge. The Index is up 4.13% in 2017. The Barclay Hedge Fund Index has now been profitable for seven months in a row, with a cumulative gain of 6.10%. The Barclay Technology Index has gained 12.27% in the fi