skip to primary navigationskip to content
 

Finance & Accounting Subject Group Seminar: Debt Maturity and the Liquidity of Secondary Debt Markets by Max Bruche

When May 13, 2013
from 11:00 AM to 12:30 PM
Where KH107, Cambridge Judge Business School
Contact Name
Add event to calendar vCal
iCal

Abstract:

 We develop an equilibrium model of debt maturity choice of firms, in the presence of fixed issuance costs in primary debt markets, and an illiquid over-the-counter secondary debt market with search frictions. Liquidity in this market is related to the ratio of buyers to sellers, which is determined in equilibrium via the free entry of buyers. Short maturities improve the bargaining position of debt holders who sell in the secondary market and hence reduce the interest rate that firms need to offer on debt. Long maturities reduce re-issuance costs. The optimally chosen maturity trades o_ both considerations. Firms individually do not internalize that choosing a longer maturity increases the expected gains from trade in the secondary market, which attracts more buyers, and hence also facilitates the sale of debt issued by other firms. As a result, the laissez-faire equilibrium exhibits inefficiently short maturity choices.

Dr Max Bruche Senior Lecturer in Finance, Cass Business School, City University London

« April 2018 »
April
MoTuWeThFrSaSu
1
2345678
9101112131415
16171819202122
23242526272829
30

RSS Feed Latest news

Best Student Paper Award 2018 - registration is now closed

Feb 02, 2018

For the last ten years, Cambridge Finance is offering its Best Student Paper Award. The award comprises a cash honorarium of £1,000 and a certificate is awarded to the author of the best student paper in finance presented during the 2017-2018 academic year.

View all news

Upcoming events

Cambridge Finance Workshop - Richard Sloan

May 03, 2018

Room W4.03, Cambridge Judge Business School

Previous events

Upcoming events