What’s wrong with Pittsburgh? Delegated investors and liquidity concentration

Andra Ghent

Journal of Financial Economics, 2021, vol. 139, issue 2, 337-358

Abstract: What makes an asset institutional quality? This paper proposes that one reason is the existing concentration of delegated investors in a market through a liquidity channel. Consistent with this intuition, it documents differences in investor composition across US cities and shows that delegated investors concentrate their investments in cities with higher turnover. It then estimates a search model showing how heterogeneity in liquidity preferences makes some markets more liquid, even when assets have identical cash flows. The paper provides evidence for clientele equilibria arising in frictional asset markets and suggests that a liquidity channel may explain divergent paths in city development.

Keywords: Alternative asset classes; Delegated asset management; Liquidity (search for similar items in EconPapers)
JEL-codes: G11 G12 R33 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0304405X20302439
Full text for ScienceDirect subscribers only

Related works:
Working Paper: What's Wrong with Pittsburgh? Delegated Investors and Liquidity Concentration (2019)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:139:y:2021:i:2:p:337-358

DOI: 10.1016/j.jfineco.2020.08.015

Access Statistics for this article

Journal of Financial Economics is currently edited by G. William Schwert

More articles in Journal of Financial Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().