VGSF Finance Research Seminar

Wirtschaftsuniversität Wien, Departments 3 3.0.22511:00 - 12:30

Art Vortrag/Diskussion
Vortragende/rAdrian Buss (INSEAD)
Veranstalter Wirtschaftsuniversität Wien The Implications of Financial Innovation for Capital Markets and Household Welfare
Kontakt office@vgsf.ac.at

The FRS informs about state-of-t­he-art rese­arch in Finance.

Our objec­tive is to under­stand how financial inno­va­tion affects inves­tors’ optimal asse­t-al­lo­ca­tion deci­sions and the economic mecha­nisms through which these deci­sions influence financial markets, welfare, and wealth inequa­lity. We show that when some inves­tors, such as house­holds, are less confident than other inves­tors about the dyna­mics of the new asset made avail­able by financial inno­va­tion, but learn over time, many “intui­tive” results are reversed: financial inno­va­tion increases the return vola­ti­lity and risk premium of the new asset along with vola­ti­li­ties of inves­tors’ port­fo­lios. Despite the increase in vola­ti­li­ties, financial inno­va­tion improves the welfare of all inves­tors but worsens wealth inequa­lity because expe­ri­enced inves­tors benefit more from it.

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