An analysis of over-the-counter and centralized stock lending markets

Zsuzsa R. Huszár and Melissa Porras Prado ()

Journal of Financial Markets, 2019, vol. 43, issue C, 31-53

Abstract: We provide new insights about centralized and OTC stock lending in the context of Tokyo Stock Exchange listed stocks from July 2006 to December 2009. We find that not only the demand drivers in the two markets are significantly different but also the pricing efficiency implications of the alternative markets are different. Specifically, we find that higher OTC stock lending activity is associated with greater pricing efficiency and better liquidity. The benefits of the centralized market on average is less clear, but when the OTC market is constrained, it is shown to relax short-sale constraints and improve liquidity.

Keywords: Stock lending; Pricing efficiency; Short selling (search for similar items in EconPapers)
JEL-codes: G12 G14 G18 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finmar:v:43:y:2019:i:c:p:31-53

DOI: 10.1016/j.finmar.2018.10.004

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