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Please use this identifier to cite or link to this item:
http://hdl.handle.net/10419/64828
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Full metadata record
| DC Field | | Value | | Language |
| dc.contributor.author | | Reitz, Stefan | | en_US |
| dc.contributor.author | | Schmidt, Markus A. | | en_US |
| dc.contributor.author | | Taylor, Mark P. | | en_US |
| dc.date.accessioned | | 2012-10-01 | | en_US |
| dc.date.accessioned | | 2012-10-11T14:44:23Z | | - |
| dc.date.available | | 2012-10-11T14:44:23Z | | - |
| dc.date.issued | | 2012 | | en_US |
| dc.identifier.uri | | http://hdl.handle.net/10419/64828 | | - |
| dc.description.abstract | | Though unambiguously outperforming all other financial markets in terms of liquidity, foreign exchange trading is still performed in opaque and decentralized markets. In particular, the two-tier market structure consisting of a customer segment and an interdealer segment to which only market makers have access gives rise to the possibility of price discrimination. We provide a theoretical foreign exchange pricing model that accounts for market power considerations and analyze a database of the trades of a German market maker and his cross section of end-user customers. We find that the market maker generally exerts low bargaining power vis-á-vis his customers. The dealer earns lower average spreads on trades with financial customers than commercial customers, even though the former are perceived to convey exchange-rate-relevant information. From this perspective, it appears that market makers provide interdealer market liquidity to end-user customers with cross-sectionally differing spreads. | | en_US |
| dc.language.iso | | eng | | en_US |
| dc.publisher | | Kiel Institute for the World Economy (IfW) Kiel | | en_US |
| dc.relation.ispartofseries | | Kiel Working Paper 1794 | | en_US |
| dc.subject.jel | | F31 | | en_US |
| dc.subject.ddc | | 330 | | en_US |
| dc.subject.keyword | | foreign exchange | | en_US |
| dc.subject.keyword | | market microstructure | | en_US |
| dc.subject.keyword | | pricing behavior | | en_US |
| dc.title | | Financial intermediation and the role of price discrimination in a two-tier market | | en_US |
| dc.type | | Working Paper | | en_US |
| dc.identifier.ppn | | 726717592 | | en_US |
| dc.rights | | http://www.econstor.eu/dspace/Nutzungsbedingungen | | en_US |
| Appears in Collections: | | Publikationen von Forscherinnen und Forschern des IfW Kieler Arbeitspapiere, IfW
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