The primary dealer system in lower-income economies

Tadashi Endo

Emerging Markets Review, 2020, vol. 45, issue C

Abstract: This work examines the commercial viability of market-making under the primary dealer system (PD system) in the government securities market (GSM) of lower-income economies, using the three-decomposition model developed for bid-ask spread analysis on the U.S. quote-driven stock markets. Evidence suggests that primary dealers (PDs) were not making a market through two-way firm quotes as it would be commercially inviable in lower-income GSMs. The finding of purposely aggressive PDs in high-income economies prompts a further study on an optimal and fair allocation of resources across the primary and secondary markets.

Keywords: Government security; Lower-income economy; Market making; Market development; Primary dealer (search for similar items in EconPapers)
JEL-codes: E44 H63 O16 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ememar:v:45:y:2020:i:c:s1566014119302195

DOI: 10.1016/j.ememar.2020.100715

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