collateral agreement. We then verify the effect of the collateral agreement on the derivative transaction by using the …, and enables us to observe the influence of the collateral agreement on these. Our numerical results also verify how the … market equilibriums for the derivatives change according to the change of the collateral amount through the demand …

collateral to support arbitrage trades. We show that with volatile asset demands, arbitrage becomes risky. With information … frictions, a looser collateral policy might render the economy more vulnerable to extremely large demand shocks, while a tighter … collateral constraint helps maintain the stability at the cost of market liquidity supply …