Annual Conference

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Investment Finance, Senior Fellows/Fellows

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May 2023

Financial Intermediaries vs. Capital Allocation: The Forgotten Role of Mutual Funds

Yanbo WANG, Hong ZHANG, Massimo MASSA
Recent evidence challenges the allocational efficiency of firms (in allocating capital to more productive sectors). We investigate whether financial intermediaries can help achieve better allocation. We find domestic mutual funds exhibit significant allocational efficiency in their equity investment...
Keywords: Allocational efficiency, Mutual Fund Investment, capital markets
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Annual Conference

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Investment Finance

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May 2022

Financial intermediaries and contagion in market efficiency: The case of ETFs

Frank Weikai LI, Claire Yurong HONG, Avanidhar SUBRAHMANYAM
Capital constraints of financial intermediaries can affect liquidity provision. We investigate whether these constraints spillover and consequently cause contagion in the degree of market efficiency across assets managed by a common intermediary. Specifically, we provide evidence of strong comovemen...
Keywords: ETFs, financial intermediaries, capital constraints
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Annual Conference

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Investment Finance

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May 2024

Equity Lender Base and Limits to Arbitrage

Xi DONG, Qifei ZHU
Using new data on mutual funds’ equity lending positions, we find that short sellers borrow shares from a small set of repeated lenders and the composition of lenders differs from stock to stock. We argue that this fragmented, persistent lender base is driven by investors’ inelastic lending supp...
Keywords: Limits to Arbitrage, Equity Lending, Short Selling, Mutual Funds
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Annual Conference

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Investment Finance

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May 2023

Emotional Safety Net Against Financial Distress

Da KE
Does emotional support matter for financial outcomes? Using microdata from U.S. and Australian household surveys, I document that individuals who lack emotional support are more likely to experience financial hardship. This relationship is not confounded by other forms of support—such as financial...
Keywords: emotional support, financial distress, social networks
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Annual Conference

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Investment Finance

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May 2016

Efficiently Inefficient Markets for Assets and Asset Management

Nicolae GÂRLEANU, Lasse HEJE PEDERSEN
We consider a model where investors can invest directly or search for an asset manager, information about assets is costly, and managers charge an endogenous fee. The efficiency of asset prices is linked to the efficiency of the asset management market: if investors can find managers more easily, mo...
Keywords: Asset Pricing, market efficiency, Asset Management, search, Information
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