Reciprocal Lending Relationships Between Financial Conglomerates: Evidence from the Mexican Repo Market
This paper examines the reciprocal lending between Financial Conglomerates in the repo market to better understand both what motivates powerful firms to engage in this type of contemporaneous crossfunding relationships, and, on the other hand, some of the implications that such reciprocal transactio...
- Autores:
- Tipo de recurso:
- Fecha de publicación:
- 2020
- Institución:
- Universidad del Rosario
- Repositorio:
- Repositorio EdocUR - U. Rosario
- Idioma:
- eng
- OAI Identifier:
- oai:repository.urosario.edu.co:10336/20793
- Acceso en línea:
- https://doi.org/10.48713/10336_20793
https://repository.urosario.edu.co/handle/10336/20793
- Palabra clave:
- Economía financiera
G01
G11
G21
G23
G28
L16
L22
L4
Reciprocal lending
collateralized money market
repo
banks
mutual funds
asset managers
market power
financial stability
Reciprocal lending
Collateralized money market
Repo
Banks
Mutual funds
Asset managers
Market power
Financial stability
Análisis de conglomerados empresariales
Administración de créditos
Política crediticia
Financiamiento de empresas
Riesgo (Finanzas
Préstamos recíprocos
- Rights
- License
- http://purl.org/coar/access_right/c_abf2
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Reciprocal Lending Relationships Between Financial Conglomerates: Evidence from the Mexican Repo MarketEconomía financieraG01G11G21G23G28L16L22L4Reciprocal lendingcollateralized money marketrepobanksmutual fundsasset managersmarket powerfinancial stabilityReciprocal lendingCollateralized money marketRepoBanksMutual fundsAsset managersMarket powerFinancial stabilityAnálisis de conglomerados empresarialesAdministración de créditosPolítica crediticiaFinanciamiento de empresasRiesgo (FinanzasPréstamos recíprocosThis paper examines the reciprocal lending between Financial Conglomerates in the repo market to better understand both what motivates powerful firms to engage in this type of contemporaneous crossfunding relationships, and, on the other hand, some of the implications that such reciprocal transactions may entail for the agents involved and for the market as a whole. In particular, in terms of the implications we focus on two dimensions: first, the potential effects that reciprocal lending has on the market power of FCs and the competitiveness of the repo market for mutual funds and second, the potential implications that frequent and stable reciprocal lending can have in terms of the industry’s systemic risk. Using transaction-level data from the Mexican repo market, we show that reciprocal lending between financial conglomerates is mutually beneficial as it reduces search costs for borrowers and mitigates credit risk concerns for lenders. Further, we find that reciprocal lending favors market concentration of the repo lending in a few powerful funds and increases fund market power. Finally, we find that reciprocal lending also leads to centrality within the financial network and increases the dependence between the parties involved. Interestingly, a higher intensity of reciprocal lending can harmful, but this does not necessarily deteriorates financial stability.2020-01-292020-02-03T20:39:30Zinfo:eu-repo/semantics/workingPaperhttp://purl.org/coar/resource_type/c_804257text/htmlapplication/pdfCañón, Carlos y Florez-Acosta, Jorge y Gómez, Karoll, Relaciones de préstamos recíprocos entre conglomerados financieros: evidencia del mercado mexicano de repos (29 de enero de 2020).https://doi.org/10.48713/10336_20793 https://repository.urosario.edu.co/handle/10336/20793instname:Universidad del Rosarioreponame:Repositorio Institucional EdocURenghttps://ssrn.com/abstract=3371036https://ideas.repec.org/p/col/000092/017801.htmlhttp://purl.org/coar/access_right/c_abf2Cañón, CarlosFlorez-Acosta, JorgeGómez Portilla, Karolloai:repository.urosario.edu.co:10336/207932020-02-12T16:20:27Z |
dc.title.none.fl_str_mv |
Reciprocal Lending Relationships Between Financial Conglomerates: Evidence from the Mexican Repo Market |
title |
Reciprocal Lending Relationships Between Financial Conglomerates: Evidence from the Mexican Repo Market |
spellingShingle |
Reciprocal Lending Relationships Between Financial Conglomerates: Evidence from the Mexican Repo Market Economía financiera G01 G11 G21 G23 G28 L16 L22 L4 Reciprocal lending collateralized money market repo banks mutual funds asset managers market power financial stability Reciprocal lending Collateralized money market Repo Banks Mutual funds Asset managers Market power Financial stability Análisis de conglomerados empresariales Administración de créditos Política crediticia Financiamiento de empresas Riesgo (Finanzas Préstamos recíprocos |
title_short |
Reciprocal Lending Relationships Between Financial Conglomerates: Evidence from the Mexican Repo Market |
title_full |
Reciprocal Lending Relationships Between Financial Conglomerates: Evidence from the Mexican Repo Market |
title_fullStr |
Reciprocal Lending Relationships Between Financial Conglomerates: Evidence from the Mexican Repo Market |
title_full_unstemmed |
Reciprocal Lending Relationships Between Financial Conglomerates: Evidence from the Mexican Repo Market |
title_sort |
Reciprocal Lending Relationships Between Financial Conglomerates: Evidence from the Mexican Repo Market |
dc.subject.none.fl_str_mv |
Economía financiera G01 G11 G21 G23 G28 L16 L22 L4 Reciprocal lending collateralized money market repo banks mutual funds asset managers market power financial stability Reciprocal lending Collateralized money market Repo Banks Mutual funds Asset managers Market power Financial stability Análisis de conglomerados empresariales Administración de créditos Política crediticia Financiamiento de empresas Riesgo (Finanzas Préstamos recíprocos |
topic |
Economía financiera G01 G11 G21 G23 G28 L16 L22 L4 Reciprocal lending collateralized money market repo banks mutual funds asset managers market power financial stability Reciprocal lending Collateralized money market Repo Banks Mutual funds Asset managers Market power Financial stability Análisis de conglomerados empresariales Administración de créditos Política crediticia Financiamiento de empresas Riesgo (Finanzas Préstamos recíprocos |
description |
This paper examines the reciprocal lending between Financial Conglomerates in the repo market to better understand both what motivates powerful firms to engage in this type of contemporaneous crossfunding relationships, and, on the other hand, some of the implications that such reciprocal transactions may entail for the agents involved and for the market as a whole. In particular, in terms of the implications we focus on two dimensions: first, the potential effects that reciprocal lending has on the market power of FCs and the competitiveness of the repo market for mutual funds and second, the potential implications that frequent and stable reciprocal lending can have in terms of the industry’s systemic risk. Using transaction-level data from the Mexican repo market, we show that reciprocal lending between financial conglomerates is mutually beneficial as it reduces search costs for borrowers and mitigates credit risk concerns for lenders. Further, we find that reciprocal lending favors market concentration of the repo lending in a few powerful funds and increases fund market power. Finally, we find that reciprocal lending also leads to centrality within the financial network and increases the dependence between the parties involved. Interestingly, a higher intensity of reciprocal lending can harmful, but this does not necessarily deteriorates financial stability. |
publishDate |
2020 |
dc.date.none.fl_str_mv |
2020-01-29 2020-02-03T20:39:30Z |
dc.type.none.fl_str_mv |
info:eu-repo/semantics/workingPaper |
dc.type.coar.fl_str_mv |
http://purl.org/coar/resource_type/c_8042 |
dc.identifier.none.fl_str_mv |
Cañón, Carlos y Florez-Acosta, Jorge y Gómez, Karoll, Relaciones de préstamos recíprocos entre conglomerados financieros: evidencia del mercado mexicano de repos (29 de enero de 2020). https://doi.org/10.48713/10336_20793 https://repository.urosario.edu.co/handle/10336/20793 |
identifier_str_mv |
Cañón, Carlos y Florez-Acosta, Jorge y Gómez, Karoll, Relaciones de préstamos recíprocos entre conglomerados financieros: evidencia del mercado mexicano de repos (29 de enero de 2020). |
url |
https://doi.org/10.48713/10336_20793 https://repository.urosario.edu.co/handle/10336/20793 |
dc.language.none.fl_str_mv |
eng |
language |
eng |
dc.relation.none.fl_str_mv |
https://ssrn.com/abstract=3371036 https://ideas.repec.org/p/col/000092/017801.html |
dc.rights.coar.fl_str_mv |
http://purl.org/coar/access_right/c_abf2 |
rights_invalid_str_mv |
http://purl.org/coar/access_right/c_abf2 |
dc.format.none.fl_str_mv |
57 text/html application/pdf |
dc.source.none.fl_str_mv |
instname:Universidad del Rosario reponame:Repositorio Institucional EdocUR |
instname_str |
Universidad del Rosario |
institution |
Universidad del Rosario |
reponame_str |
Repositorio Institucional EdocUR |
collection |
Repositorio Institucional EdocUR |
repository.name.fl_str_mv |
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repository.mail.fl_str_mv |
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1803710510549434368 |