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http://ssrn.com/abstract=1024973
 
 

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Enforcement Problems and Secondary Markets


Fernando Broner


CREI; Universitat Pompeu Fabra; Barcelona GSE; CEPR

Alberto Martin


Universitat Pompeu Fabra - Centre de Recerca en Economia Internacional (CREI); Centre for Economic Policy Research (CEPR)

Jaume Ventura


Universitat Pompeu Fabra - Centre de Recerca en Economia Internacional (CREI); Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

October 2007

NBER Working Paper No. w13559

Abstract:     
There is a large and growing literature that studies the effects of weak enforcement institutions on economic performance. This literature has focused almost exclusively on primary markets, in which assets are issued and traded to improve the allocation of investment and consumption. The general conclusion is that weak enforcement institutions impair the workings of these markets, giving rise to various inefficiencies. But weak enforcement institutions also create incentives to develop secondary markets, in which the assets issued in primary markets are retraded. This paper shows that trading in secondary markets counteracts the effects of weak enforcement institutions and, in the absence of further frictions, restores efficiency.

Number of Pages in PDF File: 13

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Date posted: October 31, 2007  

Suggested Citation

Broner, Fernando and Martin, Alberto and Ventura, Jaume, Enforcement Problems and Secondary Markets (October 2007). NBER Working Paper No. w13559. Available at SSRN: http://ssrn.com/abstract=1024973

Contact Information

Fernando Broner
CREI ( email )
Ramon Trias Fargas, 25-27
Barcelona, Catalonia 08005
Spain
+34 93 542 2601 (Phone)
+34 93 542 1860 (Fax)
HOME PAGE: http://www.crei.cat/people/broner
Universitat Pompeu Fabra ( email )
Ramon Trias Fargas, 25-27
Barcelona, Catalonia 08005
Spain
+34 93 542 2601 (Phone)
+34 93 542 1860 (Fax)
HOME PAGE: http://www.crei.cat/people/broner
Barcelona GSE
Ramon Trias Fargas 25-27
Barcelona, Catalonia 08005
Spain
+34 93 542 2601 (Phone)
CEPR ( email )
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
+34 93 542 2601 (Phone)
+34 93 542 1860 (Fax)
Alberto Martin
Universitat Pompeu Fabra - Centre de Recerca en Economia Internacional (CREI) ( email )
Ramon Trias Fargas, 25-27
Barcelona, 08005
Spain
Centre for Economic Policy Research (CEPR) ( email )
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
Jaume Ventura (Contact Author)
Universitat Pompeu Fabra - Centre de Recerca en Economia Internacional (CREI) ( email )
Ramon Trias Fargas, 25-27
Barcelona, 08005
Spain
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
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Citations:  3

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