We develop a two-asset search-and-bargaining model of OTC trading to estimate frictions and welfare losses in the UK government and corporate bond markets. Using transaction-level data and a matched client sample, we find that both trading delays and intermediation frictions...

In a dynamic model of large traders who manage inventory risk, we show that a daily market closure coordinates liquidity. This coordination of liquidity can improve allocative efficiency relative to 24/7 trade, fully offsetting the costs of the closure. Some...

A maturity wall occurs in private credit funds when the fund reaches its maturity date, where it can no longer roll over its loans. Unlike banks, which are not bound by a maturity wall, private credit funds can better incentivize...

Complexity can create value. At the same time, understanding more complex goods requires more of an agent’s attention. We show that equilibrium complexity is generally ine?cient when agents face competing demands on their limited attention. Because attention allocation is hump-shaped...

We develop a model of financial intermediation with remunerated Central Bank Digital Currency (CBDC) as consumers’ alternative to bank deposits and an endogenous risk of bank runs. Echoing widespread concerns, higher CBDC remuneration raises bank fragility by increasing consumers’ withdrawal...

We study a credit market in which lending decisions depend on a borrower's digital profile, and the borrower can manipulate their digital profile. When the borrower observes the amount of data collected by the lender, manipulation increases as the lender...