The Financial Institutions Incentives When They Place Financial Assets with Credit Risk to Retail Investors

37 Pages Posted: 17 Dec 2010 Last revised: 13 Mar 2013

See all articles by Ramiro Losada

Ramiro Losada

Comision Nacional del Mercado de Valores

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Date Written: March 11, 2013

Abstract

This paper analyzes the conflict of interest that exists when a financial institution issues and places a financial asset with credit risk among retail investors. Four regulatory measures are presented and analyzed in order to improve retail investors protection. Theoretically, it is shown that two of these measures, setting a price cap to the issue and an adequate enforcement could implement a first best social optimum.

Keywords: conflict of interest, retail investors, regulation

JEL Classification: G12, G18

Suggested Citation

Losada, Ramiro, The Financial Institutions Incentives When They Place Financial Assets with Credit Risk to Retail Investors (March 11, 2013). Available at SSRN: https://ssrn.com/abstract=1725766 or http://dx.doi.org/10.2139/ssrn.1725766

Ramiro Losada (Contact Author)

Comision Nacional del Mercado de Valores ( email )

c/edison 4
Madrid, Madrid 28006
Spain

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