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Multimarket trading and corporate bond liquidity

  • Petrasek, Lubomir
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    Global bonds are international securities traded and settled efficiently in multiple markets. This paper examines global bonds to evaluate the effects of multimarket trading on corporate bond liquidity and pricing. The results show that global bonds are significantly more liquid than similar-sized domestic bonds of the same issuers, and their liquidity advantage is reflected in higher market valuations. These findings support microstructure models that predict a positive relation between the number of potential investors and liquidity in over-the-counter markets, and help explain the increasing use of global bonds by corporate issuers.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0378426612000775
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    Article provided by Elsevier in its journal Journal of Banking & Finance.

    Volume (Year): 36 (2012)
    Issue (Month): 7 ()
    Pages: 2110-2121

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    Handle: RePEc:eee:jbfina:v:36:y:2012:i:7:p:2110-2121
    Contact details of provider: Web page: http://www.elsevier.com/locate/jbf

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