NDLI: The Shift From Active to Passive Investing: Potential Risks to Financial Stability?

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The Shift From Active to Passive Investing: Potential Risks to Financial Stability?

Content Provider	Scilit
Author	Anadu, Kenechukwu Kruttli, Mathias S. McCabe, Patrick E. Osambela, Emilio Shin, Chaehee
Copyright Year	2019
Description	Journal: SSRN Electronic Journal The past couple of decades have seen a significant shift from active to passive investment strategies. We examine how this shift affects financial stability through its impacts on: (i) funds’ liquidity and redemption risks, (ii) asset-market volatility, (iii) asset-management industry concentration, and (iv) comovement of asset returns and liquidity. Overall, the shift appears to be increasing some risks and reducing others. Some passive strategies amplify market volatility, and the shift has increased industry concentration, but it has diminished some liquidity and redemption risks. Finally, evidence is mixed on the links between indexing and comovement of asset returns and liquidity.
Related Links	https://www.bostonfed.org/-/media/Documents/Workingpapers/PDF/2018/rpa1804.pdf https://papers.ssrn.com/sol3/Delivery.cfm?abstractid=3244467
ISSN	10914358
e-ISSN	15565068
DOI	10.2139/ssrn.3244467
Journal	SSRN Electronic Journal
Language	English
Publisher	Elsevier BV
Publisher Date	2019-09-17
Access Restriction	Open
Subject Keyword	Journal: SSRN Electronic Journal Asset Management Passive Investing Index Investing Mutual Fund Exchange-traded Fund Leveraged and Inverse Exchange-traded Products Financial Stability Systemic Risk Market Volatility Inclusion Effects
Content Type	Text
Resource Type	Article
Subject	Public Health, Environmental and Occupational Health Psychiatry and Mental Health

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