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Strategic supply management and mechanism choice in government debt auctions: An empirical analysis from the Philippines

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  • Mariño, Eduardo Anthony G.
  • Marszalec, Daniel

Abstract

We examine bond auctions in the Philippines by using bid data from around 500 Treasury auctions. The Philippines features a strategic auctioneer who uses both discriminatory and uniform-price auctions, and actively manages supply. Here, discriminatory auctions generate lower borrowing costs, at the expense of concentrating awards among fewer bidders. We observe that the decision to restrict supply is driven by borrowing cost and strength of demand. Bidders adjust for winner’ s curse by submitting bids with higher yield spreads in response to higher volatility and more competitors. Though bidder heterogeneity exists, average auction profits do not significantly differ across bidder types.

Suggested Citation

  • Mariño, Eduardo Anthony G. & Marszalec, Daniel, 2023. "Strategic supply management and mechanism choice in government debt auctions: An empirical analysis from the Philippines," Journal of Banking & Finance, Elsevier, vol. 154(C).
    • Handle: RePEc:eee:jbfina:v:154:y:2023:i:c:s0378426623001504
    DOI: 10.1016/j.jbankfin.2023.106945
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    More about this item

    Keywords

    Auctions; Discriminatory auction; Uniform-price auction; Treasury bills; Active supply management; Quantity restriction;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • H63 - Public Economics - - National Budget, Deficit, and Debt - - - Debt; Debt Management; Sovereign Debt

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