This paper presents a model of an over-the-counter bond market in which bond dealers and cash investors arrange repurchase agreements (repos) endogenously. If cash investors buy bonds to store their cash, then they suffer an endogenous bond-liquidation cost because they must sell their bonds...

Financial markets underwent significant changes worldwide within the last decades. Structural changes involving traditional operators led to modifications of the regulatory as well as supervisory settings of the financial system. Therefore, the paper tries to find a solution for a proper and...