IDEAS home Printed from https://ideas.repec.org/a/inm/ormnsc/v72y2026i6p5232-5247.html

Financial Intermediaries and Agency Problems With and Without Vertical Incentives

Author

Listed:
  • Yeonjoon Lee

    (Quantitative Supervision & Research Group, Federal Reserve Bank of Richmond, Charlotte, North Carolina 28202)

Abstract

I study the role of vertical incentives between upstream issuers and downstream brokers in the retail bond market when there exist agency problems. Although arms-length transaction regulations require that vertical incentives not influence their activities, I show that both upstream issuers and downstream brokers are sensitive to vertical incentives. I then present a structural model in order to measure the degree of vertical incentives for downstream brokers, controlling for the extent of agency problems. The structural estimates show that brokers are willing to give up one dollar of their own profit if their vertically integrated issuer’s profit goes up by 1.25 dollars.

Suggested Citation

  • Yeonjoon Lee, 2026. "Financial Intermediaries and Agency Problems With and Without Vertical Incentives," Management Science, INFORMS, vol. 72(6), pages 5232-5247, June.
    • Handle: RePEc:inm:ormnsc:v:72:y:2026:i:6:p:5232-5247
    DOI: 10.1287/mnsc.2023.03572
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1287/mnsc.2023.03572
    Download Restriction: no
    File URL: https://libkey.io/10.1287/mnsc.2023.03572?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:inm:ormnsc:v:72:y:2026:i:6:p:5232-5247. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Asher (email available below). General contact details of provider: https://edirc.repec.org/data/inforea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.