Optimal primary dealer selection in financial networks

Rongtai Chu, Zhongjie Fan, Zehao Liu and Dunzhe Tang

Economics Letters, 2024, vol. 234, issue C

Abstract: This paper establishes a financial network model with bank heterogeneity to analyze the optimal choice of primary dealers. We conclude that expansionary monetary policy should utilize small banks as primary dealers while contractionary monetary policy should utilize large banks as primary dealers.

Keywords: Primary dealer; Financial network; Heterogeneity (search for similar items in EconPapers)
JEL-codes: D85 E58 G21 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:234:y:2024:i:c:s0165176523005062

DOI: 10.1016/j.econlet.2023.111480

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