New working paper on the impact of the leverage ratio on repo market functioning

In my new working paper “Repo Market Functioning: The Role of Capital Regulation”, Antonis Kotidis and I show that a tightening of the leverage ratio in the UK reduced repo market liquidity, especially affecting smaller end users such as banks, insurers, pension funds and asset managers. We also show that other foreign dealers not affected by the tightening stepped into the market and gained market share, effectively benefitting from tighter UK regulation.