Fisher separation theorem

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The Fisher separation theorem states that savings and investment decisions can be separated from one another by capital markets in the following sense: savers do not need investment projects to generate returns and, conversely, investors do not need their own savings to finance their projects.

The 1930 theorem is named after the economist Irving Fisher . It applies in a strict form assuming perfect and complete capital markets . Under these conditions, investment decisions are determined solely by the net present value and savings decisions solely by subjective preferences. The capital markets bring these decisions together via the interest rate mechanism .

Due to the elimination of subjective preferences, the company's goal is solely to maximize the company's value ( shareholder value ).

The composition of the optimal portfolio on a perfect capital market under uncertainty is described by the Tobin separation . The separation concept in general describes the independence of optimal decisions from certain characteristics of the decision or situation. The Tobin separation describes the independence of the decision on the optimal composition of a securities portfolio from the risk attitude .

literature

  • Fisher, Irving The Theory of Interest , New York, 1930 ( PDF version )

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