Could regulation of the ABS secondary market improve social welfare?

Ramiro Losada López

CNMV Working Papers from CNMV- Spanish Securities Markets Commission - Research and Statistics Department

Abstract: CONTENTS: This paper examines a model of market making in the ABS market with heterogeneous investors and a lack of price transparency. It is shown that in a world with no price transparency, allowing free entry of market makers might not be a social optimum. Social welfare would be improved by a regulation to restrict the number of market makers in the ABS market to the extent that price competition is guaranteed.

Keywords: ABS market; financial regulation; horizontal differentiation (search for similar items in EconPapers)
JEL-codes: G15 G18 L81 (search for similar items in EconPapers)
Date: 2009
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