Diversity of Opinion and Financing of New Technologies

Franklin Allen and Douglas Gale ()

Center for Financial Institutions Working Papers from Wharton School Center for Financial Institutions, University of Pennsylvania

Abstract: The objective is to compare the effectiveness of financial markets and financial intermediaries in financing new industries and technologies in the presence of diversity of opinion. In markets, investors become informed about the details of the new industry or technology and make their own investment decisions. In intermediaries, the investment decision is delegated to a manager. She is the only one who needs to become informed, which saves on information costs, but investors may anticipate disagreement with her and be unwilling to provide funds. Financial markets tend to be superior when there is significant diversity of opinion and information is inexpensive.

Date: 1999-03
References: Add references at CitEc
Citations: View citations in EconPapers (161)

Downloads: (external link)
http://fic.wharton.upenn.edu/fic/papers/98/9830.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://fic.wharton.upenn.edu/fic/papers/98/9830.pdf [301 Moved Permanently]--> https://wifpr.wharton.upenn.edu/fic/papers/98/9830.pdf)

Related works:
Journal Article: Diversity of Opinion and Financing of New Technologies (1999)
Working Paper: Diversity of Opinion and Financing of New Technologies (1998)
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:wop:pennin:98-30

Access Statistics for this paper

More papers in Center for Financial Institutions Working Papers from Wharton School Center for Financial Institutions, University of Pennsylvania Contact information at EDIRC.
Bibliographic data for series maintained by Thomas Krichel ().