Abstract

http://ssrn.com/abstract=1102573
 
 

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A Multiple Lender Approach to Understanding Supply and Search in the Equity Lending Market


Adam C. Kolasinski


Texas A&M, Mays School of Business

Adam V. Reed


University of North Carolina Kenan-Flagler Business School

Matthew Ringgenberg


Washington University in Saint Louis - Olin Business School

October 8, 2012

Journal of Finance, Forthcoming

Abstract:     
Using unique data from 12 lenders, we examine how equity lending fees respond to demand shocks. We find that when demand is moderate, fees are largely insensitive to demand shocks. However, at high demand levels, further increases in demand lead to significantly higher fees and the extent to which demand shocks impact fees is also related to search frictions in the loan market. Moreover, consistent with search models, we find significant dispersion in loan fees, with this dispersion increasing in loan scarcity and search frictions. Our findings imply that search frictions significantly impact short selling costs.

Number of Pages in PDF File: 56

Keywords: short sale constraints, equity lending, short selling

JEL Classification: G12, G29

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Date posted: March 8, 2008 ; Last revised: October 9, 2012

Suggested Citation

Kolasinski, Adam C. and Reed, Adam V. and Ringgenberg, Matthew, A Multiple Lender Approach to Understanding Supply and Search in the Equity Lending Market (October 8, 2012). Journal of Finance, Forthcoming. Available at SSRN: http://ssrn.com/abstract=1102573 or http://dx.doi.org/10.2139/ssrn.1102573

Contact Information

Adam C. Kolasinski
Texas A&M, Mays School of Business ( email )
360 Wehner
College Station, TX 77843-4218
United States
Adam V. Reed (Contact Author)
University of North Carolina Kenan-Flagler Business School ( email )
Kenan-Flagler Business School
Chapel Hill, NC 27599-3490
United States

Matthew C. Ringgenberg
Washington University in Saint Louis - Olin Business School ( email )
Campus Box 1133
One Brookings Drive
St. Louis, MO 63130-4899
United States
HOME PAGE: http://apps.olin.wustl.edu/faculty/Ringgenberg/
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