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Institutional Investors

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Institutional Investors

MIT Press,

15 min read
10 take-aways
Text available

What's inside?

Institutional investors have a major impact on the market and on their host countries. Do you want one in your wallet?

Editorial Rating

6

Qualities

  • Innovative

Recommendation

This encyclopedic effort by two prominent financial scholars, E. Philip Davis and Dr. Benn Steil, leaves no stone unturned and virtually no question unanswered. The authors have managed to thread through the labyrinth of institutional investing, covering multitudes of regulatory, economic, practical and theoretical issues without ever losing their readers. Astonishingly well-organized and clearly written, this book is an outstanding reference. If it has a flaw, it may be that it is almost too vast to digest. And, of course, it is rapidly becoming dated. Having been published in 2001, it could not take into account the dramatic events and implications of the dot-com bubble and the wave of corporate scandals that raised such serious questions about the role and responsibility of institutional fiduciaries. Yet it does cover, with foresight, globalization and many other trends in the world of investment. getAbstract.com highly recommends this book for all the knowledge it conveys to corporate finance executives and investors at every level.

Summary

Growth and Types of Institutional Investors

Several forces have contributed to the astonishing growth of institutional investors over the last few decades, growth that has been most dramatic in the Anglo-Saxon world. Demographic changes - a richer, grayer population - have spurred demand for savings and investment services. Meanwhile, deregulation, financial market opportunities and technology have helped make a wider array of products and services available to the public.

Future growth is almost certain to result from the U.S. Social Security crisis and the parallel crises posed by aging populations in other countries. Almost all developed countries, especially those in continental Europe, have made social welfare promises to their citizens that will be difficult to keep. These countries are apt to encourage more private saving in the future in order to reduce the drain on the public purse. If they do, the magnitude of the potential change in the financial system is difficult to exaggerate.

Institutional investors have the following characteristics in common:

  • Pooling of risk - They aggregate the savings of many small investors, thus...

About the Authors

E. Philip Davis is Professor of Economics and Finance at Brunel University and Visiting Fellow at the National Institute of Economic and Social Research in London. Dr. Benn Steil is Senior Fellow and Linda J. Wachner Chair in Foreign Economic Policy at the Council of Foreign Relations and editor of the journal International Finance.

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