Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
960789 | Journal of Financial Intermediation | 2007 | 26 Pages |
Abstract
The competition between a central securities depository (CSD) and a custodian bank is analyzed in a Stackelberg model. Investor banks decide whether to use the services of the CSD or of the custodian bank, depending on the prices and their preferences for their inhomogeneous services. Since the custodian bank uses services provided by the CSD as input, the CSD can raise its rival's costs. The CSD's equilibrium market share is higher than socially optimal, unless the CSD is not allowed to charge negative prices. This result has important policy implications that are related to a discussion currently taking place in the securities settlement industry.
Keywords
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Social Sciences and Humanities
Business, Management and Accounting
Strategy and Management
Authors
Cornelia Holthausen, Jens Tapking,