CANCELLED: FRIC/Finance Seminar with Nicola Gennaioli, Università Bocconi
FRIC Center for Financial Frictions and the Department of Finance are proud to announce the upcoming seminar with Nicola Gennaioli, Università Bocconi
Nicola Gennaioli will present
Nicola Gennaioli, Università Bocconi
Andrei Shleifer, Harvard University
Robert Vishny, University of Chicago
We introduce the model of asset management developed in Gennaioli, Shleifer, and Vishny (GSV, 2014) into a Solow-style neoclassical growth model with diminishing returns to capital. Savers rely on trusted intermediaries to manage their wealth (claims on capital stock), who can charge fees above costs to trusting investors. In this model, the ratio of financial income to GDP increases with the ratio of aggregate wealth to GDP. Both rise along the convergence path to steady state growth. We examine several further implications of the model for management fees, unit costs of finance, and the consequences of shocks to trust and to the capital stock.