Intermediary Activities On Decentralized Financial Markets
نویسندگان
چکیده
Financial intermediary institutions often compete and cooperate with each other at the same time. These financial actors provide services to their investors, and enter into transactions with them. Moreover, these players very often trade with each other to mitigate their market risks related to their exposures against their clients. Decentralized inter-dealer markets differ from the Walrasian textbook markets in three characteristics: transactions are bilateral, market players form a network, market players possess diverse bargaining power. We develop and simulate a single-period model to describe the benefits of those dealers on the network, who not only mitigate the risk, but connect other dealers on these markets.
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