Information Transmission and Micro-structure rents in Emerging Markets
AbstractThis paper offers a first ever theoretical study of a unique financing instrument associated with prominent emerging equity markets in South Asia. The instrument known as badla, in local parlance, has two interesting aspects, which have been ignored thus far. Firstly, it may serve as an information transmission mechanism and can be thought of as an institutional response to information gaps in the emerging markets. Secondly, it creates new types of rents, called “market microstructure” rents for certain market players. These rents are then exploited to gain control of the governing boards of equity markets. Consequently, institutional inertia is created which hinders the badly needed reform process.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 15452.
Date of creation: 10 Feb 2009
Date of revision:
Information transmission; Signaling; Microstructure rents; Linked games; Institutional inertia;
Find related papers by JEL classification:
- D02 - Microeconomics - - General - - - Institutions: Design, Formation, and Operations
- K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
- D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
- G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
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