Post by arfankj4 on Mar 6, 2024 10:41:11 GMT
Customers of a financial intermediary in contrast provide financing in exchange for a specific set of services and do not want the fulfillment of these services to be contingent on the credit risk of the intermediary even when they are not small uninformed agents lacking in sophistication. This paper develops a framework that defines the roles of customers and investors in intermediaries and uses the framework to provide an economic foundation for the aversion to intermediary credit risk on the part of its customers.
It further explores the implications of this customer investor nexus for a host of issues related to how contracts between financial intermediaries and their customers are structured and how risks are shared between them as well as the consequences of unexpected deviations from the ex ante optimal contractual arrangement. We show that the optimality of insulating the customer from the credit risk of the intermediary explains various contractual Poland Mobile Number List arrangements institutions and regulatory practices observed in practice. Moreover customers and investors are often intertwined in practice and so this intertwining provides insights into the adoption of too big to fail policies and bailouts by regulators in general. Finally the approach taken here shows that financial crises may be a consequence of observed but unexpected deviations from the ex ante optimal risk sharing arrangement between financial intermediaries and their customers. Pages item.aspx num CASES COURSE MATERIALS HARVARD BUSINESS SCHOOL CASE Evans Food In April Hector.
Guerra GMP was discussing his company s dilemma with his living group of the General Management Program GMP at the Harvard Business School. Guerra was vice president of Operations at Evans Food a million company which produced pork rinds salty snacks made out of pork skin sold at some of the largest U.S. retailers such as HEB Meijer ALDI and Wal Mart. In the last few years the cost of pork skin had increased dramatically but Evans Food s selling price to its customers had not kept pace with the increase in raw material costs. The company was losing money on some of the largest accounts but it seemed difficult if not impossible to seek price increases from multibillion dollar retailers.
It further explores the implications of this customer investor nexus for a host of issues related to how contracts between financial intermediaries and their customers are structured and how risks are shared between them as well as the consequences of unexpected deviations from the ex ante optimal contractual arrangement. We show that the optimality of insulating the customer from the credit risk of the intermediary explains various contractual Poland Mobile Number List arrangements institutions and regulatory practices observed in practice. Moreover customers and investors are often intertwined in practice and so this intertwining provides insights into the adoption of too big to fail policies and bailouts by regulators in general. Finally the approach taken here shows that financial crises may be a consequence of observed but unexpected deviations from the ex ante optimal risk sharing arrangement between financial intermediaries and their customers. Pages item.aspx num CASES COURSE MATERIALS HARVARD BUSINESS SCHOOL CASE Evans Food In April Hector.
Guerra GMP was discussing his company s dilemma with his living group of the General Management Program GMP at the Harvard Business School. Guerra was vice president of Operations at Evans Food a million company which produced pork rinds salty snacks made out of pork skin sold at some of the largest U.S. retailers such as HEB Meijer ALDI and Wal Mart. In the last few years the cost of pork skin had increased dramatically but Evans Food s selling price to its customers had not kept pace with the increase in raw material costs. The company was losing money on some of the largest accounts but it seemed difficult if not impossible to seek price increases from multibillion dollar retailers.