Can Financial Engineering Cure Cancer?

S-Tier
Journal: American Economic Review
Year: 2013
Volume: 103
Issue: 3
Pages: 406-11

Authors (4)

David E. Fagnan (not in RePEc) Jose Maria Fernandez (not in RePEc) Andrew W. Lo (Massachusetts Institute of Tec...) Roger M. Stein (not in RePEc)

Score contribution per author:

2.011 = (α=2.01 / 4 authors) × 4.0x S-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

Traditional financing sources such as private and public equity may not be ideal for investment projects with low probabilities of success, long time horizons, and large capital requirements. Nevertheless, such projects, if not too highly correlated, may yield attractive risk-adjusted returns when combined into a single portfolio. Such "megafund" portfolios may be too large to finance through private or public equity alone. But with sufficient diversification and risk analytics, debt financing via securitization may be feasible. Credit enhancements (i.e., derivatives and government guarantees) can also improve megafund economics. We present an analytical framework and illustrative empirical examples involving cancer research.

Technical Details

RePEc Handle
repec:aea:aecrev:v:103:y:2013:i:3:p:406-11
Journal Field
General
Author Count
4
Added to Database
2026-01-25