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| Author: | Mehran, H. Stulz, R.M. |
| Title: | The economics of conflicts of interest in financial institutions |
| Journal: | Journal of Financial Economics
2007 : AUG, VOL. 85:2, p. 267-296 |
| Index terms: | conflict economic analysis financial institutions |
| Language: | eng |
| Abstract: | A conflict of interest exists when a party to a transaction can gain by taking actions that are detrimental to its counterpart. This paper examines the growing empirical literature on the economics of conflicts of interest in financial institutions. Economic analysis shows that, although conflicts of interest are omnipresent when contracting is costly and parties are imperfectly informed, there are important factors that mitigate their impact and, strikingly, it is possible for customers of financial institutions to benefit from the existence of such conflicts. |
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