Three Essays on US Corporate Bond Market and Canadian Newspaper Market
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Authors
Diao, Chengjie
Date
2024-04-09
Type
thesis
Language
eng
Keyword
Canadian Newspaper Market , US Corporate Bond Market , Liquidity and market friction , search and inventory cost
Alternative Title
Abstract
This thesis presents an empirical study of the US Corporate Bond market and the
consolidation of the Canadian Community Newspaper Market. First, we focus on the effects
of post-crisis regulations designed to reduce risk exposure on dealers’ trading behaviors
and market liquidity. A simple model is developed to illustrate the relationship between
dealers’ trading behaviors and market liquidity, specifically predicting that optimizing
relationships with long-term trading partners enables dealers to maintain the same level
of liquidity while reducing inventory risk. Empirical regression analysis, using the Trace
Academic dataset, was conducted to test this hypothesis. The findings support the notion
that since the implementation of the Dodd-Frank Act, dealers have indeed optimized
their trading partnerships to provide consistent liquidity levels under regulatory pressure,
thereby enhancing market efficiency.
The thesis also delves into the origins of the centrality premium in the US corporate
bond market, which operates on an over the counter basis. In this market, dealers are
positioned within a network, with more connected, central dealers at the core and less
connected, peripheral dealers at the edges. A common observation is that core dealers
typically charge higher markups than their peripheral counterparts, resulting in a centrality
premium. The study investigates the factors contributing to this premium. It reveals that
core dealers capitalize on their search efforts, retain bonds for longer periods, and engage
with higher-valued clients, leading to a greater trading surplus.
Finally, I explore the consolidation of the Canadian community newspaper market. In
2017, Postmedia and Metroland engaged in a swap involving dozens of newspapers across
several local regional markets, followed by closing most of the swapped publications. This
led to an increased concentration in these markets, potentially resulting in anti-competitive
impacts. My investigation delves into the details of advertising rates before and after this
event. My findings reveal that while there is indeed a spike in the average advertising rate
in the treatment markets following the event. However, this is attributable to the strategic
shutdown of lower-rate newspapers following the swap. There is no evidence of always
existing newspapers increasing rates after the swap events.
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Queen's University's Thesis/Dissertation Non-Exclusive License for Deposit to QSpace and Library and Archives Canada
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Intellectual Property Guidelines at Queen's University
Copying and Preserving Your Thesis
This publication is made available by the authority of the copyright owner solely for the purpose of private study and research and may not be copied or reproduced except as permitted by the copyright laws without written authority from the copyright owner.
ProQuest PhD and Master's Theses International Dissemination Agreement
Intellectual Property Guidelines at Queen's University
Copying and Preserving Your Thesis
This publication is made available by the authority of the copyright owner solely for the purpose of private study and research and may not be copied or reproduced except as permitted by the copyright laws without written authority from the copyright owner.