Papers

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Market opacity and fragility: Why liquidity evaporates when it is most needed

Giovanni Cespa, Xavier Vives   Dec 04,2023

Working Paper No.00131-00

We show that, consistent with empirical evidence, access to order flow information allows traders to supply liquidity via contrarian marketable... Read More

The Tokenomics of Staking

Zhiheng He,Ke Tang, Lin William Cong (叢林)   Dec 30,2023

Working Paper No.00134-00

Blockchain-based platforms and decentralized finance prominently features ``staking'': Besides offering a convenience yield for transactions as digital media of exchange,... Read More

Market Integration, Risk-Taking, and Income Inequality

Ron Kaniel , Yizhou Xiao Lin William Cong (叢林)   Dec 30,2023

Working Paper No.00136-00

A pandemic or nationalism can dial back global integration as much as advancements in IT and transportation spur it. We... Read More

Trust in Signals and the Origins of Disagreement

Alice Hsiaw, Ing-Haw Cheng   Nov 14,2022

Working Paper No.00047-01

Why do individuals interpret the same information differently? We propose that individuals follow Bayes' Rule when forming posteriors with one exception:... Read More

Endogenous Specialization and Dealer Networks

Batchimeg Sambalaibat   Jul 07,2021

Working Paper No.00014-02

We build a directed search model of network formation. We propose that a core-periphery interdealer network arises from dealer specialization. Read More

A Theory of Liquidity Spillover Between Bond and CDS Markets

Batchimeg Sambalaibat   Jul 07,2021

Working Paper No.00072-00

I build a search model of bond and credit default swap (CDS) markets with endogenous investor participation and show that... Read More

Strategic Fragmented Markets

Ana Babus , Cecilia Parlatore   Apr 30,2021

Working Paper No.00071-00

We study the determinants of asset market fragmentation in a model with strategic investors that disagree about the value of... Read More

Published: Journal of Financial Economics, 2022, 145(), 876-908

A Theory of Participation in OTC and Centralized Markets

Jerome Dugast, Pierre-Olivier Weill , Semih Uslu   Sep 29,2021

Working Paper No.00052-02

Should regulators encourage the migration of trade from over-the-counter (OTC) to centralized markets? To address this question, we study a... Read More

Published: Review of Economic Studies, 2022, 89(6), 3223-3266

Risk seekers: trade, noise, and the rationalizing effect of market impact on convex preferences

Efstathios Avdis   Oct 08,2020

Working Paper No.00051-02

Long-held intuition dictates that information-based trade is impossible without exogenous noise. Risk seekers can resolve this conundrum. Even though such... Read More

Inventory Management, Dealers' Connections, and Prices in OTC Markets

Thierry Foucault,Peter Hoffmann, Jean-Edouard Colliard   Oct 08,2020

Working Paper No.00063-00

We propose a new model of trading in OTC markets. Dealers accumulate inventories by trading with end-investors and trade among... Read More