Bidder behavior in central bank repo auctions: Evidence from the Bundesbank

For many central banks, repo auctions are the most important monetary policy instrument. This paper employs a unique data set of individual bids submitted in the repo auctions of the Bundesbank to analyze the determinants of banks' bidding behavior and the empirical performance of repo auctions. We conduct a panel analysis to estimate how banks bidding is affected by various auction as well as bidder-specific factors including interest rate expectations, interest rate uncertainty, maturing allotment, reserve fulfillment and a bank's size.