Tomura, Hajime - Faculty of Economics, University of Tokyo - 2014
This paper presents a three-period model featuring a short-term investor in the over-the-counter bond market. A short-term … investor stores cash because of a need to pay cash at some future date. If a short-term investor buys bonds, then a deadline …-ante, this hold-up problem explains the use of a repo by a short-term investor, the existence of a haircut, and the vulnerability …