Reallocating savings to investment - The new role of asset managers

Y. Perrier

Financial Stability Review, 2015, issue 19, 157-164

Abstract: The “Great Recession” has highlighted several major changes: production factors with diminishing returns, technological breakthroughs and productive investments that are either insufficient or inadequate for generating future growth. Yet, investing in the economy to ensure future growth often means investing in small-sized projects and companies. It is essential to i) opt for a more effective allocation of savings across investment vehicles to promote long-term savings and “risky” assets; taxation and financial education are key areas to focus on; ii) improve the flow of savings across Europe in order to channel the excess savings in the North towards investment shortfalls in the South. Asset managers, which manage private savings and institutional savings, are naturally at the crossroads of these financial channels, and they play a major role between investors’ search for yield (whether domestically or internationally) and companies’ investment needs (whether large or small). It is therefore crucial to ensure that a lack of knowledge about their activities, inadequate regulatory frameworks or savings misallocation will not constrain the growth potential of innovating companies. It is especially with respect to savings misallocation that asset managers have a role to play.

Date: 2015
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