In this note, Dr. Tiemann analyzes the assertion that Dodd-Frank financial reform legislation, passed in the aftermath of the financial crisis, has contributed to a decline in the liquidity in the bond market. Dodd-Frank set out to moderate the risks that banks might take with their balance sheets but Wall Street has tried to argue that the law's restrictions impair the profitability of bond dealing, resulting in declining liquidity of the bond market and therefore could cause a market disruption. Dr. Tiemann utilizes the underlying data of bond trading before and after to evaluate Wall Street's assertion and used the show boxplot to show how bond trading liquidity has increased since Dodd-Frank was implemented.
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Topics & Details
- Tags - Authorized Participants, boxplots, Closed End Funds, Dodd-Frank, ETFs, NAV, Open-End Funds
- Categories - Bonds, Competition, Economics, Marginal Liquidity, Market Disruption, Markets, NAV - Net Assest Value, Notes, Trusted Intermediaries, Wall Street
- Download the PDF: - Is Bond Market Liquidy Really Falling?
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