This paper models the important role that repurchase agreements (repos) play in bond market intermediation. Not only do … borrowing demands, thus increasing the borrowing cost for the asset (i.e., repo specialness). Dealers pass on the higher … intermediation cost to their clients in the form of higher bid-ask spreads. Although this method of intermediation is optimal, the …

market liquidity over time, when dealer balance sheet utilization reaches sufficiently high levels, liquidity is much worse … intermediation capacity of bond markets. …

that contribute more to the utilization of risk constraints. The impaired intermediation also affects Treasury yields … of dealer constraints is as high as one-third of dealers' intermediation margin. …

collateral multiplier is defined as the ratio between dealer banks' matched book repo activity relative to their trading book … repo collateral. Our model and empirical results shed light on the transmission mechanisms of monetary policy channeled …