Working Paper: CEPR ID: DP10350
Authors: Luigi Zingales
Abstract: Academics' view of the benefits of finance vastly exceeds societal perception. This dissonance is at least partly explained by an under-appreciation by academia of how, without proper rules, finance can easily degenerate into a rent-seeking activity. I outline what finance academics can do, from a research point of view and from an educational point of view, to promote good finance and minimize the bad.
Keywords: financial development; financial integration; rent seeking
JEL Codes: G00; O43
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Public perception of finance (negative) (G40) | Public trust (decreased) (D73) |
| Public trust (decreased) (D73) | Enforcement of contracts (weakened) (K12) |
| Enforcement of contracts (weakened) (K12) | Functioning of financial system (deteriorated) (E44) |
| Growth of financial sector (increased) (O16) | Societal benefits (not increased) (D69) |
| Societal benefits (not increased) (D69) | Rent-seeking behavior (increased) (D72) |