DP14847 The search theory of OTC markets

Author(s): Pierre-Olivier Weill
Publication Date: June 2020
Keyword(s): Asset Pricing, OTC markets, search frictions
JEL(s): G11, G12, G21
Programme Areas: Financial Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=14847

I review the recent literature that applies search-and-matching theory to the study of Over-the-Counter (OTC) financial markets. I formulate and solve a simple model in order to illustrate the typical assumptions and economic forces at play in existing work. I then offer thematic tours of the literature and, in the process, discuss avenues for future research.