Secrets of Finances and Payday Loans

Foucault, Kadan and Kandel (2005) develop a model for a limit order market where there are only strategic liquidity traders and the choice between limit and market orders depends only on their degree of impatience. This model focuses on one of the dimensions of liquidity, namely immediacy. Traders who want to trade as soon as [...]

The corporate bond market is a leading indicator of economic activity. However, its forecasting power is obviously not perfect, because – like equity markets – credit spreads sometimes predict recessions that do not occur subsequently. After the 1987 stock market crash, for example, credit spreads widened significantly. Asimilar observation could be made in 1998, following [...]