The Journal of Finance

The Journal of Finance publishes leading research across all the major fields of finance. It is one of the most widely cited journals in academic finance, and in all of economics. Each of the six issues per year reaches over 8,000 academics, finance professionals, libraries, and government and financial institutions around the world. The journal is the official publication of The American Finance Association, the premier academic organization devoted to the study and promotion of knowledge about financial economics.

AFA members can log in to view full-text articles below.

Current Issue:

Volume 79: Issue 3 (June 2024)

Top 25 Recent Articles

Top 50 Articles of All Time

View past issues

Search the Journal of Finance:






Search results: 1.

Does Risk Sharing Motivate Interdealer Trading?

Published: 12/17/2002   |   DOI: 10.1111/0022-1082.00068

PETER C. REISS, INGRID M. WERNER

We use unique data from the London Stock Exchange to test whether interdealer trade facilitates inventory risk sharing among dealers. We develop a methodology that focuses on periods of “extreme” inventories—inventory cycles. We further distinguish between inventory cycles that are unanticipated and those that are anticipated because of “worked” orders. The pattern of interdealer trade during inventory cycles matches theoretical predictions for the direction of trade and the inventories of trade counterparts. We also show that London dealers receive higher trading revenues for taking larger positions.

  View PDF     Read article online