Artikel
Private and public liquidity provision in over-the-counter markets
We show that trade frictions in OTC markets result in inefficient private liquidity provision. We develop a dynamic model of market-based financial intermediation with a two-way interaction between primary credit markets and secondary OTC markets. Private allocations are generically inefficient because investors and firms fail to internalize how their actions affect liquidity in secondary markets. This inefficiency can lead to liquidity that is suboptimally low or high compared to the second best, providing a rationale for the regulation and public provision of liquidity. Moreover, our model characterizes a transmission channel of quantitative easing or tightening operating through liquidity premia.
- Sprache
-
Englisch
- Erschienen in
-
Journal: Theoretical Economics ; ISSN: 1555-7561 ; Volume: 15 ; Year: 2020 ; Issue: 4 ; Pages: 1669-1712 ; New Haven, CT: The Econometric Society
- Klassifikation
-
Wirtschaft
Financial Markets and the Macroeconomy
General Financial Markets: Government Policy and Regulation
Corporate Finance and Governance: General
- Thema
-
Liquidity provision
market liquidity
over-the-counter markets
quantitative easing
quantitative tightening
monetary policy normalization
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Arseneau, David M.
Rappoport, David E.
Vardoulakis, Alexandros P.
- Ereignis
-
Veröffentlichung
- (wer)
-
The Econometric Society
- (wo)
-
New Haven, CT
- (wann)
-
2020
- DOI
-
doi:10.3982/TE3419
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:44 MEZ
Datenpartner
Dieses Objekt wird bereitgestellt von:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.
Objekttyp
- Artikel
Beteiligte
- Arseneau, David M.
- Rappoport, David E.
- Vardoulakis, Alexandros P.
- The Econometric Society
Entstanden
- 2020
Ähnliche Objekte (12)
Liquidity Shocks in Over-the-Counter Markets
Monetary policy, asset prices, and liquidity in over-the-counter markets
Compressing over-the-counter markets
Centralizing over-the-counter markets?
The effect of central counterparties on counterparty risk, liquidity and systemic risk of Over-the-Counter markets
Discriminatory pricing of over-the-counter derivatives
Central counterparties and liquidity provision in cash markets
Trading volume and liquidity provision in cryptocurrency markets
Argumentative Patterns in Over-the-Counter Medicine Advertisements
The informational content of over-the-counter currency options
The informational content of over-the-counter currency options
The Digital Disruption in Over-The-Counter Drug Retailing
Liquidity Shocks in Over-the-Counter Markets
Monetary policy, asset prices, and liquidity in over-the-counter markets
Compressing over-the-counter markets
Centralizing over-the-counter markets?
The effect of central counterparties on counterparty risk, liquidity and systemic risk of Over-the-Counter markets
Discriminatory pricing of over-the-counter derivatives
Central counterparties and liquidity provision in cash markets
Trading volume and liquidity provision in cryptocurrency markets
Argumentative Patterns in Over-the-Counter Medicine Advertisements
The informational content of over-the-counter currency options
The informational content of over-the-counter currency options
The Digital Disruption in Over-The-Counter Drug Retailing
Liquidity Shocks in Over-the-Counter Markets
Monetary policy, asset prices, and liquidity in over-the-counter markets
Compressing over-the-counter markets
Centralizing over-the-counter markets?
The effect of central counterparties on counterparty risk, liquidity and systemic risk of Over-the-Counter markets
Discriminatory pricing of over-the-counter derivatives
Central counterparties and liquidity provision in cash markets
Trading volume and liquidity provision in cryptocurrency markets
Argumentative Patterns in Over-the-Counter Medicine Advertisements
The informational content of over-the-counter currency options
The informational content of over-the-counter currency options