OFFSHORE ZONES AS AN EFFECTIVE TOOLINTERNA TIONAL FINANCIAL MARKET

Aquaculture in offshore zones.

THE EDITORIAL BY ROSAMOND NAYLOR, “Offshore aquaculture legislation” (8 Sept., p. 1363), suggests that the motivation for moving aquaculture into the open ocean is that “marine f ish farming near the shore is limited by state regulations.” Although unworkable regulations may exist in a few states, in the larger scheme this is irrelevant. Of the offshore aquaculture projects currently under way,...

Financial market crisis and financial market channel

Non-Financial Firms as Cross-Market Arbitrageurs∗

I demonstrate that non-financial corporations act as cross-market arbitrageurs in their own securities. Firms use one type of security to replace another in response to shifts in relative valuations, inducing negatively-correlated financing flows in different markets. Net equity repurchases and net debt issuance both increase when the expected returns on debt are particularly low, or when the e...

Understanding Financial Market States Using an Artificial Double Auction Market.

The ultimate value of theories describing the fundamental mechanisms behind asset prices in financial systems is reflected in the capacity of such theories to understand these systems. Although the models that explain the various states of financial markets offer substantial evidence from the fields of finance, mathematics, and even physics, previous theories that attempt to address the complex...

Financial Intermediation Chains in an OTC Market∗

More and more layers of intermediaries arise in modern financial markets. What determines this chain of intermediation? What are the consequences? We analyze these questions in a stylized search model with an endogenous intermediary sector and intermediation chains. We show that the chain length and the price dispersion among inter-dealer trades are decreasing in search cost, search speed, and ...