CEIS-Tor Vergata is pleased to inform you that, on Friday November 25, 2011 at 12.00 pm, prof. Cyril Monet (University of Bern) will present a paper on “Why Rent When You Can Buy? A Theory of Repurchase Agreements” The Seminar will be held at the Faculty of Economics, University of Rome "Tor Vergata", B-building, 1° floor, room B Please, go to www.ceistorvergata.it for the complete list of seminars and events at CEIS. How to reach us: http://web.uniroma2.it/mobilita/index.html http://www.economia.uniroma2.it/area.asp?a=867 ABSTRACT In a model with matching frictions, we provide conditions under which repurchase agreements (or repos) co-exist with asset sales. In a repo, the seller agrees to repurchase the asset at a later date at the agreed price. Absent matching frictions, repos have no role. Introducing pairwise meetings, we show that agents prefer to sell asset whenever they face little uncertainty regarding the future use of the asset. As agents become more uncertain of the value of holding the asset, repos become more prevalent. We show that while the total volume of repos is always increasing with the uncertainty, the total sales volume is hump-shaped. In other words, pairwise matching alone is sufficient to explain why repo markets exist and there is no need to introduce information asymmetries or other market frictions. Barbara Piazzi __________ Informazioni da ESET NOD32 Antivirus, versione del database delle firme digitali 6648 (20111121) __________ Il messaggio è stato controllato da ESET NOD32 Antivirus. www.nod32.it |
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