Corporate Bond Trading Costs: A Peek Behind the Curtain

Paul Schultz

Journal of Finance, 2001, vol. 56, issue 2, 677-698

Abstract: In this paper, I use institutional corporate bond trade data to estimate transactions costs in the over‐the‐counter bond market. I find average round‐trip trading costs to be about $0.27 per $100 of par value. Trading costs are lower for larger trades. Small institutions pay more to trade than large institutions, all else being equal. Small bond dealers charge more than large ones. I find no evidence that trading costs more for lower‐rated bonds.

Date: 2001
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Persistent link: https://EconPapers.repec.org/RePEc:bla:jfinan:v:56:y:2001:i:2:p:677-698

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