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Dealer intermediation strategies and implications for market liquidity

This project considers the recent evolution of dealer intermediation strategies in financial markets and implications for market liquidity in light of concerns about regulatory changes raising intermediation costs for large financial institutions. Using newly available transaction-level data tracking individual participants in US corporate bond markets, we characterize dealer intermediation strategies by quantifying inventory holdings and trading patterns for various securities. We assess whether the evolution of trading strategies post-crisis suggests that regulation has permanently or temporarily increased the cost of market-making, and implications for liquidity supply, customer trading costs, and vulnerability to shocks.

Project period: January 2018 - November 2018

PI: Giancarlo Corsetti, Faculty of Economics

End of Award Report - April 2019

Project Update - August 2018

Project Update - April 2018

 

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CERF Scholar Shiqi Chen presented her paper at Leeds University Business School

Jun 28, 2019

Shiqi Chen presented her paper entitled “Financial Policies and Internal Governance with Heterogeneous Risk Preferences” (joint with Bart Lambrecht) in the Accounting and Finance seminar at Leeds University Business School, the Finance seminar at Essex Business School, CERF Lunch Seminar at Cambridge Judge Business School, and at the 2019 Annual Real Options Conference in London.

Winners of the Best Student Paper Award 2019 were announced

Jun 17, 2019

At the end of term staff-student lunch at the Cambridge Judge Business School on 14 June

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