Many arbitrage strategies are dominated by a few large arbitrageurs who recognize their price impact. I model arbitrageurs as imperfectly competitive intermediaries facilitating risk-sharing between two clienteles of competitive investors. I show that in the presence of market power, i)...

We study strategic trading by a blockholder who can intervene over time to influence the firm's cash flows. We consider the impact of asymmetric information on the incentives of the blockholder to trade, and study when information asymmetry increases blockholder ownership and leads to greater...

We analyze how a large informed trader chooses between a lit exchange and a dark pool. We show that (1) the market share of the dark pool increases when the informed trader trades; (2) the market share of the dark pool increases more when the value of information is higher; and (3) price...

Loan syndication increases bank interconnectedness through co-lending relationships. We study the financial stability implications of such dependency on syndicate partners in the presence of shocks to banks' capital. Model simulations in a network setting show that such shocks can produce rare...

We study a repeated Cournot competition model where prices are determined not only by firms' quantities but also unobservable market shocks (Green and Porter, 1984). Unlike Green and Porter (1984), market shocks are persistent and today's market condition affects tomorrow's market condition....

This paper provides evidence that informed traders dominate the response of limit-order submissions to shocks in a pure limit-order market. In the market we study, informed traders are highly sensitive to spreads, volatility, momentum and depth. By contrast, uninformed traders are relatively...

In this paper we take into account the role of the banking system, credit and stock market in stimulating aggregate demand in post Keynesian tradition. According to the results of impulse response analysis; it appears all three financial development indicators contributed as expected in...

This study investigates whether fluctuations in credit supply in a macroeconomy and a relational bank's financial condition affect the capital structure adjustment of firms. Using data for Japanese listed firms from 1988 to 2014, we find that firms adjust their capital structure slower during...