Finance Seminar: Nicolae Gârleanu, UC Berkeley

Wednesday March 1, 2017 4:00 PM

Finance in a Time of Disruptive Growth

Speaker: Nicolae Gârleanu, Haas School of Business, University of California, Berkeley
Location: Baxter B125

Abstract: Increased arrival of new technologies and displacement of old technologies leads to increased heterogeneity of investment income across investors. Investors who find themselves with high exposures to successful new firms win a disproportionate share of profits, while those who hold lower exposures may end up with a lower fraction of aggregate investment income. "Alternative asset classes" as diverse as commercial real estate, commodities, and private equity offer hedging and diversification benefits in a world of increased displacement, and therefore experience inflows. The same applies to zero-net supply risk free investments, leading to a drop in the risk free rate. Surprisingly, and despite providing hedging benefits, there is a positive gap between the expected returns of privately and publicly traded assets, which narrows as the - endogenously determined - size of the financial industry increases.

Finance Seminars at Caltech are funded through the generous support of The Ronald and Maxine Linde Institute of Economic and Management Sciences (lindeinstitute.caltech.edu) and Stephen A. Ross.

Series Finance Seminar Series

Contact: Sabrina De Jaegher at 626-395-4228 sabrina@hss.caltech.edu