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Securitization, Liquidity, and Market Failure

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  • Paul Davidson

Abstract

Computerized markets do not work the way the old securities markets once did. In the past, there were always market makers who stood between the buyer and the seller. Today, this is an antiquated system, relegated to such ancient institutions as the New York Stock Exchange. But this economist argues they are of far more than symbolic importance. Efficient markets will not guarantee liquidity, he says. The theory is wrong. And Keynes himself provides an important insight for how to proceed.

Suggested Citation

  • Paul Davidson, 2008. "Securitization, Liquidity, and Market Failure," Challenge, Taylor & Francis Journals, vol. 51(3), pages 43-56.
    • Handle: RePEc:mes:challe:v:51:y:2008:i:3:p:43-56
    DOI: 10.2753/0577-5132510303
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    Cited by:

    1. Wu, Binghui, 2018. "Asset securitization and rate of return: A study on letters of guarantee," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 490(C), pages 1551-1554.
    2. Charfeddine, Lanouar & Benlagha, Noureddine, 2016. "A time-varying copula approach for modelling dependency: New evidence from commodity and stock markets," Journal of Multinational Financial Management, Elsevier, vol. 37, pages 168-189.
    3. Timothy C. Johnson, 2013. "Reciprocity as the foundation of Financial Economics," Papers 1310.2798, arXiv.org.
    4. Ben Fine, 2010. "Looking at the Crisis through Marx – Or Is It the Other Way About?," Chapters, in: Steven Kates (ed.), Macroeconomic Theory and its Failings, chapter 4, Edward Elgar Publishing.
    5. Michelle Baddeley, 2014. "Rethinking the micro-foundations of macroeconomics: insights from behavioural economics," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 11(1), pages 99-112, April.

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