Wednesday 11 May 2011

UK: Short-termism in capital markets

Last year, Andrew Haldane, an executive director and member of the Financial Policy Committee at the Bank of England, delivered a paper titled "Patience and Finance" at the Oxford China Business Forum in Beijing (see here, pdf). Mr Haldane returns to this topic today in a lecture at the 29th Société Universitaire Européene de Recherches Financières Colloquium: New Paradigms in Money and Finance in Brussels.

In the lecture - titled "The short long" and available here (pdf) - Mr Haldane notes the (relative) paucity of studies on short-termism in capital markets. He argues, on the basis of his empirical research, that short-termism is statistically and economically significant in capital markets and appears to be increasing. In response to this finding of market failure, Mr Haldane identifies possible public policy responses including those concerning transparency, governance, contract design and taxation.

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