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Overbidding in Fixed Rate Tenders - An Empirical Assessment of Alternative Explanations

Dieter Nautz () and Jörg Oechssler

No 10/2003, Bonn Econ Discussion Papers from University of Bonn, Bonn Graduate School of Economics (BGSE)

Abstract: This paper investigates various theories explaining banks' overbidding in the fixed rate tenders of the European Central Bank (ECB). Using auction data from both the Bundesbank and the ECB, we show that none of the theories can on its own explain the observed overbidding. This implies that the proposed new rules by the ECB, aimed at neutralizing interest rate expectations, would not eliminate overbidding if the rationing rule in the fixed rate tenders remains unchanged.

Keywords: Overbidding; repo auctions; monetary policy instruments of the European Central Bank (search for similar items in EconPapers)
JEL-codes: E52 D44 (search for similar items in EconPapers)
Date: 2003
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Journal Article: Overbidding in fixed rate tenders--an empirical assessment of alternative explanations (2006) Downloads
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