The Governance of Perpetual Financial Intermediaries
Bibliographic Data
| ID | 24048424 |
|---|---|
| Authors | José Penalva (0000-0002-1793-9642, Universitat Pompeu Fabra), Jos van Bommel (Universitat Pompeu Fabra) |
| Year | 2017 |
| Volume | 173 |
| Issue | 3 |
| Pages | 498-522 |
| Publication date | 2017-01-01 |
| Open Access | No |
| Type | ARTICLE |
| Venue | Journal of Institutional and Theoretical Economics JITE (JOURNAL) |
| Journal identifiers | ISSN: 0932-4569 • E-ISSN: 1614-0559 |
| Publisher | Mohr Siebeck (PUBLISHER) |
| DOI | 10.1628/093245616x14798149327649 |
| OpenAlex | W3121386019 |
| Language | EN |
| References cited | 8 |
We reexamine the risk-sharing potential of intergenerational financial intermediaries, taking into account their governance structure. We argue that asset buffers of perpetual institutions are limited by the temptation of the living stakeholders to renegotiate contributions and distributions. We characterize the renegotiation constraint and show that it severely limits intergenerational risk sharing. Without renegotiation frictions, intermediaries cannot provide higher welfare than a market. The existence of (self-imposed) renegotiation costs relaxes the constraint. By forming a single monopolist intermediary, agents can further improve welfare. (JEL: G21, D91)
Business · Corporate governance · Financial intermediary · Financial system · Intermediary · Banking stability, regulation, efficiency · Economic theories and models · Finance · Financial Literacy, Pension, Retirement Analysis
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| Highly cited | No |
|---|