Taste-based Investing, Government Policies and Competition in Financial Intermediation
Abstract
This paper develops a theory of how investors’ tastes are transmitted to aggregate investment through the market structure of financial intermediation. Whether tastes affect equilibrium capital allocation depends on where they originate—from households or from intermediaries—and on the degree of competition and segmentation in funding markets. Strong competition amplifies the pass-through of households’ tastes for amenity assets, but arbitrages away intermediaries’ own tastes. The same forces shape the effectiveness of financial-sector policies targeting households or intermediaries. I apply and quantify the framework in the context of green finance.
Fields of Study & Subjects
Sustainable Finance and Green Bonds
Financial Markets and Investment Strategies
Economic theories and models
Publication details
- Journal / source
- IMF Working Paper
- Volume
- 2026
- Issue
- 019
- Pages
- 1–1
- Publication date
- 1 January 2026
- Language
- EN