Sequential Search for Corporate Bonds
In over-the-counter (OTC) markets, customers must find a counterparty to trade. Little is known about this process, however, because existing data is comprised of transaction records, which are only informative about the end of a search. Leveraging data from the leading trading platform for corporate bonds, we study the search process: we analyze customers’ repeated attempts to trade (successful and unsuccessful). We estimate that it takes two to three days to complete a transaction after an unsuccessful attempt, with substantial variation across trade and customer characteristics. Our analysis offers insights into the sources of trading delays in OTC markets.
Non-Technical Summaries
- In contrast to stocks that are traded on established exchanges such as the New York Stock Exchange, corporate bonds are traded in over-...
Related
More from NBER
In addition to working papers, the NBER disseminates affiliates’ latest findings through a range of free periodicals — the NBER Reporter, the NBER Digest, the Bulletin on Retirement and Disability, the Bulletin on Health, and the Bulletin on Entrepreneurship — as well as online conference reports, video lectures, and interviews.
