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Could regulation of the ABS secondary market improve social welfare?

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  • Ramiro Losada López

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.

Suggested Citation

  • Ramiro Losada López, 2009. "Could regulation of the ABS secondary market improve social welfare?," CNMV Working Papers CNMV Working Papers no. 3, CNMV- Spanish Securities Markets Commission - Research and Statistics Department.
    • Handle: RePEc:cnv:wpaper:dt_37en
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    File URL: http://www.cnmv.es/DocPortal/Publicaciones/MONOGRAFIAS/37_ABSen.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    ABS market; financial regulation; horizontal differentiation;
    All these keywords.

    JEL classification:

    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce

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