Journal
JOURNAL OF FINANCE
Volume 74, Issue 1, Pages 91-144Publisher
WILEY
DOI: 10.1111/jofi.12728
Keywords
-
Categories
Funding
- Swiss Finance Institute
- Swiss National Science Foundation [CRSII1_154445/1]
- Swiss National Science Foundation (SNF) [CRSII1_154445] Funding Source: Swiss National Science Foundation (SNF)
Ask authors/readers for more resources
Dealers in the over-the-counter municipal bond market form trading networks with other dealers to mitigate search frictions. Regulatory data show that this network has a core-periphery structure with 10 to 30 hubs and over 2,000 peripheral broker-dealers in which bonds flow from periphery to core and partially back. Central dealers charge investors up to double the round-trip markups compared to peripheral dealers. In turn, central dealers provide immediacy by matching buyers with sellers more directly and prearranging fewer trades, especially during stress times. Investors thus face a trade-off between execution cost and speed, consistent with network models of decentralized trade.
Authors
I am an author on this paper
Click your name to claim this paper and add it to your profile.
Reviews
Recommended
No Data Available