Investor Presentaiton

Corollary 4.1 Market participants need (credible and independent) institutions to determine the information sensitivity of shadow banking products. Proof The argument is similar to the proof of Corollary 2.1. In order to determine the information sensitivity of a financial product s(x) which payoff is backed by project x investors need to determine distribution f(x). Investors typically do not have enough financial sophistication and knowhow to do that. So they need third party institutions to provide information about f(x) and thus the information sensitivity of s(x).

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