Among the most puzzling observations for the euro money market are the bid shading in the weekly refinancing operations and the development of interest rate spreads. To explain these observations, we considera standard divisible-good auction à la Klemperer and Meyer (1989) with uniform or...

Economists have forcefully argued for the introduction and use of property derivatives as a hedge against house price risk (e.g. Shiller and Weiss, 1999). The rationale for these financial instruments seems clear, as many households are heavily invested in housing and standard financial...

Like many financial contracts, derivatives are subject to default risk. A very popular mechanism in derivatives markets to mitigate the risk of non-performance on contracts is margining. By attaching collateral to a contract, margining supposedly reduces default risk. The broader impacts of the...

The paper investigates the determinants of trade credit and its interactions with borrowing constraints and the input combination of the firm, within an incomplete contract setting in which firms use a two-input technology and collateralised credit contracts. Assuming that the supplier is better...