Speculation and Risk Sharing with New Financial Assets Citation Simsek

  title={Speculation and Risk Sharing with New Financial Assets Citation Simsek},
  author={Alp Simsek},
While the traditional view of financial innovation emphasizes the risk sharing role of new financial assets, belief disagreements about these assets naturally lead to speculation, which represents a powerful economic force in the opposite direction. This paper investigates the effect of financial innovation on portfolio risks in an economy when both the risk sharing and the speculation forces are present. I consider this question in a standard mean-variance framework. Financial assets provide… CONTINUE READING

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