58 min

Exchange Traded Funds and Financial Stability The FinReg Pod

    • Business

Ryan Clements, assistant professor at the University of Calgary Law School, discusses his doctoral research on how Exchange Traded Funds may contribute to financial market instability. Ryan acknowledges the fact that ETFs have made the average investor immeasurably better off by providing low-cost diversification, but his research has shed light on what is a classic tragedy of the commons problem, whereby what is rational for individual investors could weaken the market as a whole. Clements also talks about how the growth in ETFs has led to investor herding behavior, and how this may be contributing to market inefficiencies.
Check out the following articles for more information:
New Funds, Familiar Fears: Do Exchange Traded Funds Make Markets Less Stable? Part I, Liquidity Illusions by Ryan Clements https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3343976
New Funds, Familiar Fears: Are Exchange Traded Funds Making Markets Less Stable? Part II – Interaction Risks by Ryan Clements https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3486027
The Hidden Dangers of the Great Index Fund Takeover by David McLaughlin and Annie Massa https://www.bloomberg.com/news/features/2020-01-09/the-hidden-dangers-of-the-great-index-fund-takeover
Want to contact the show? Reach out at reiners@law.duke.edu
Interested in learning more about issues in financial regulation and policy? Check out the Global Financial Markets Center’s blog, The FinReg Blog.
You can learn more about the Global Financial Markets Center by visiting our website: https://law.duke.edu/globalfinancialmarkets/

Ryan Clements, assistant professor at the University of Calgary Law School, discusses his doctoral research on how Exchange Traded Funds may contribute to financial market instability. Ryan acknowledges the fact that ETFs have made the average investor immeasurably better off by providing low-cost diversification, but his research has shed light on what is a classic tragedy of the commons problem, whereby what is rational for individual investors could weaken the market as a whole. Clements also talks about how the growth in ETFs has led to investor herding behavior, and how this may be contributing to market inefficiencies.
Check out the following articles for more information:
New Funds, Familiar Fears: Do Exchange Traded Funds Make Markets Less Stable? Part I, Liquidity Illusions by Ryan Clements https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3343976
New Funds, Familiar Fears: Are Exchange Traded Funds Making Markets Less Stable? Part II – Interaction Risks by Ryan Clements https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3486027
The Hidden Dangers of the Great Index Fund Takeover by David McLaughlin and Annie Massa https://www.bloomberg.com/news/features/2020-01-09/the-hidden-dangers-of-the-great-index-fund-takeover
Want to contact the show? Reach out at reiners@law.duke.edu
Interested in learning more about issues in financial regulation and policy? Check out the Global Financial Markets Center’s blog, The FinReg Blog.
You can learn more about the Global Financial Markets Center by visiting our website: https://law.duke.edu/globalfinancialmarkets/

58 min

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