Quote of the day: the central question for the finance industry to answer

   0   0 Blog, Finance Curse

financeraceFrom The Economist magazine, in an article entitled Counting the Cost of Finance, which looks at a new paper by Guillaume Bazot of the Paris School of Economics, which complements U.S.-based research on finance to look at the situation in Europe. The paper finds, unsurprisingly, that the GDP share of finance has increased continuously in Germany, France, the UK and Europe as a whole, and the unit cost of financial intermediation increased over the past 40 years.

One of the findings of recent research is that hedge funds, private equity companies and other active fund managers are, collectively worse than useless: their stock-picking skills are, on average, average: but the downside is that they will charge you huge fees. The new research is the latest to find that fees have been increasing, even as their overall performance has been getting no better.

Our quote of the day comes not from the paper but from The Economist:

“The central question that the finance industry needs to answer is this: why has its increased importance been associated with slower economic growth in the developed world and a greater number of asset bubbles?”

And this is a question that has been relevant for years before the Global Financial Crisis emerged. One more for the fast-growing Finance Curse archive.


Related Posts

New research on key role major economies play in global tax avoidance

offshore-network_colorcorrectedAn important new study on Offshore Financial Centres (OFCs) from the University of Amsterdam has made some fascinating discoveries, challenging, as the Financial Secrecy Index has, the popular misconception that tax havens are only palm fringed little islands and exposing that in fact major economies play a key role in global tax avoidance. Specifically they’ve […]

READ MORE →

Launch of international research collaboration, #AltAusterity

alt austerityToday is the launch of #AltAusterity, a new, international research collaboration of which Tax Justice Network is a partner.  The project aims to stimulate public debate on the subject of austerity though high quality research. It is a response to the lack of evidence which has underpinned the current policy agenda on austerity. The project […]

READ MORE →

RB tax avoidance – company calls for public country by country reporting after Oxfam report reveals profit shifting

pictureOxfam has today released a report on tax dodging by RB, the company formerly known as Reckitt Benckiser and the maker of thousands of well known household products. The report looks at the 2012 restructuring of the company which saw it set up ‘hubs’ in the Netherlands, Dubai and Singapore, all well known corporate tax […]

READ MORE →

Half measures mean Mauritius will continue to be a tax haven for the developing world

MauritiusThere was news this week that Mauritius has signed the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI). This is an initiative from the OECD to allow countries to take measures designed to stop tax avoidance by multinational companies and put them into their existing network of […]

READ MORE →

G20: Pressure rising on tax haven USA

HamburgWhilst the eyes of the world focused on the isolation of the US from the ‘G19’ position on climate change, something remarkable played out elsewhere in the process. Following closely the common EU position that we highlighted a few days ago, the G20 communique devotes important space to tax justice. It’s so good we quote […]

READ MORE →

About The Author

Nicholas Shaxson is a journalist and writer on the staff of Tax Justice Network. He is author of the book Poisoned Wells about the oil industry in Africa, published in 2007, and the more recent Treasure Islands: Tax havens and the Men who Stole the World, published by Random House in January 2011. He lives in Berlin
View all posts by

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to Top