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SUMMARY:Intermediation and Systemic Risk in the Repo Market - Tahbaz-Saleh
 i\, A (Columbia University)
DTSTART:20140827T133000Z
DTEND:20140827T140000Z
UID:TALK53894@talks.cam.ac.uk
CONTACT:Mustapha Amrani
DESCRIPTION:Joint with M. di Maggio\n\nIn this paper\, we focus on the fin
 ancial institutions' role as intermediaries between cash lenders (e.g. mon
 ey market funds) and borrowers (e.g. hedge funds). We show that\, by charg
 ing a haircut\, lenders can discipline the investment choices of all the p
 articipants in the market-even those with whom they are not directly contr
 acting. However\, haircuts can also work as a propagation mechanism among 
 financial institutions: idiosyncratic shocks can be amplified over the net
 work of interbank relationships\, up to the point that the market freezes 
 and its intermediation capacity collapses.\n
LOCATION:Seminar Room 1\, Newton Institute
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