Record Details

Risk Taking, Principal Agent Problems and Breakdown of Corporate Social Responsibility (CSR): How to Reestablish Safe-Assets and Capital Funding for Social Security?

Equilibrium. Quarterly Journal of Economics and Economic Policy

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Field Value
 
Title Risk Taking, Principal Agent Problems and Breakdown of Corporate Social Responsibility (CSR): How to Reestablish Safe-Assets and Capital Funding for Social Security?
 
Creator Petersen, Hans-Georg; University of Potsdam
Wiegelmann, Alexander Martin; University of Potsdam
 
Subject —
Capital funding; corporate social responsibility; financial markets; principal agent problems; risk management
D23, G01, G32, M14
 
Description The breakdown of the financial markets in fall 2007 and the following debt crisis in the EU has produced an enormous mistrust in financial products and the monetary system. The paper describes the background of the crisis induced by functional failures in risk management and the multifold principal agent problems existing in the financial market structures. The innovated nontransparent financial products have mixed up different risk weights and puzzled, or even fooled formerly loyal customers. Contemporaneously abundant liquidity on the international financial market accompanied by easy money policies of the Fed in the US and the ECB in the euro zone have depressed the real interest rate to zero or even negative values. Desperate investors are seeking for safe-assets, but their demand remains unsatisfied. Low real interest rates and the consequently lacking compound interest effect in the same time jeopardize private as well as public insurance schemes being dependent on capital funding: the demographic crisis becomes gloomy. Therefore, the managers of the financial markets have to reestablish CSR and to divide the markets into safe-asset areas for the usual clients and “casino” areas for those who like to play with high risks. Only with transparency and risk adequate financial products can the lost commitment be regained.
 
Publisher Nicolaus Copernicus University in Toruń
 
Contributor —
 
Date 2013-05-01
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
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Format application/pdf
 
Identifier http://apcz.pl/czasopisma/index.php/EQUIL/article/view/EQUIL.2013.011
10.12775/EQUIL.2013.011
 
Source Equilibrium; Vol 8, No 2 (2013); 7-30
Equilibrium; Vol 8, No 2 (2013); 7-30
Equilibrium; Vol 8, No 2 (2013); 7-30
2353-3293
1689-765X
 
Language eng
 
Relation http://apcz.pl/czasopisma/index.php/EQUIL/article/view/EQUIL.2013.011/2524
 
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