Footnote:
In: Management Science, Forthcoming
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments April 26, 2020 erstellt
Description:
We analyze financial intermediation chains in a search economy, which is populated by investors with heterogeneous valuations of an asset. In equilibrium, investors with moderate valuations choose to be intermediaries, while those with extreme valuations are their customers. The average length of intermediation chains is shown to be decreasing in search cost, search speed, and market size, but increasing in investors' trading needs. These predictions are distinct from those implied by existing models in the literature. Our empirical evidence, based on data from the U.S. corporate bond market, is mostly consistent with our model predictions