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Sequential Search for Corporate Bonds

Author

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  • Mahyar Kargar
  • Benjamin Lester
  • Sébastien Plante
  • Pierre-Olivier Weill

Abstract

In over-the-counter (OTC) markets, customers must find a counterparty to trade. Little is known about this process, however, because existing data is comprised of transaction records, which are only informative about the end of a search. Leveraging data from the leading trading platform for corporate bonds, we study the search process: we analyze customers’ repeated attempts to trade (successful and unsuccessful). We estimate that it takes two to three days to complete a transaction after an unsuccessful attempt, with substantial variation across trade and customer characteristics. Our analysis offers insights into the sources of trading delays in OTC markets.

Suggested Citation

  • Mahyar Kargar & Benjamin Lester & Sébastien Plante & Pierre-Olivier Weill, 2023. "Sequential Search for Corporate Bonds," NBER Working Papers 31904, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:31904
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    Cited by:

    1. Jan-Peter Siedlarek & Vladimir Yankov, 2025. "The Secondary Market for Syndicated Loans," Working Papers 25-10, Federal Reserve Bank of Cleveland.
    2. Assa Cohen & Mahyar Kargar & Benjamin Lester & Pierre-Olivier Weill, 2024. "Inventory, Market Making, and Liquidity in OTC Markets," Working Papers 24-22, Federal Reserve Bank of Philadelphia.
    3. Stefan J. Huber & Chongho Kim & Edward M. Watts, 2024. "Earnings News and Over‐the‐Counter Markets," Journal of Accounting Research, Wiley Blackwell, vol. 62(2), pages 701-735, May.

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    More about this item

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • G0 - Financial Economics - - General
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates

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