Topic: Benchmarks in Search Markets
Speaker: Darrell Duffie, Dean Witter Distinguished Professor of Finance, Graduate School of Business, Stanford University
Date: May 25th(Mon.)
Time: 3:00-4:30pm
Location: Building 1, Room 100
Language: English
Abstract:
We analyze the role of benchmarks in over-the-counter markets subject to search frictions. The publication of a benchmark can, under conditions, raise total social surplus by (i) increasing the volume of beneficial trade, (ii) facilitating more efficient trade matching between dealers and customers, and (iii) reducing total search costs. Although the improvement in market transparency caused by benchmarks may lower dealer profit margins on each trade, dealers may nevertheless introduce a benchmark such as LIBOR in order to encourage greater market participation by investors. In some cases, low-cost dealers may introduce a benchmark in order to increase their market share through reducing entry by high-cost dealers, a further source of efficiency gain.
About the speaker:
Darrell Duffie is the Dean Witter Distinguished Professor of Finance, Graduate School of Business Knight Way, Stanford University. He was a lecturer of many world top universities such as Oxford University, Princeton University, Carnegie-Mellon University Duisenberg Institute and Columbia University. He was named as the Distinguished Teacher of Doctoral Program of Graduate School of Business in the Stanford University. His research interest is mainly related to the security markets and derivatives. His papers have been published in Journal of Finance, Journal of Financial Economics, Review of Financial Studies and other leading finance journals. He was also listed in the corporate board room of iShare Funds and Trusts and Moody’s Corporation.
