model in which dealers intermediate trades between clients and provide immediacy, or, market liquidity. Dealers can exert … raise external finance and hence to compete aggressively with each other in providing liquidity. To alleviate the financing … endogenous and related to variations in liquidity across otherwise unrelated markets. Our results shed light on the developments …

' intermediation capacity is constrained the cost of liquidity provision increases disproportionately relative to dealer …We devise a simple model of liquidity demand and supply to deepen the understanding of dealers’ liquidity provision in …-intermediated volume. Thus, the otherwise strong and positive relation between liquidity costs and trading volume effectively shrinks to …