Institutional Brokerage Networks: Facilitating Liquidity Provision

• 成果类型: Article
• 署名作者: Han, Munhee; Kim, Sanghyun (Hugh); Nanda, Vikram K.
• 署名单位: Texas Tech University System; Texas Tech University; Wilfrid Laurier University; University of Texas System; University of Texas Dallas
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhae026
• 发表日期: 2024
• 页码: 2903
• 关键词: UPSTAIRS; performance; INFORMATION; equilibrium; centrality; returns; FAMILY; trades

摘要

We argue that institutional brokerage networks facilitate liquidity provision and mitigate the price impact of large non-information-motivated trades. Using commissions, we map trading networks of mutual funds (institutions) and their brokers. Central funds (institutions) tend to outperform their peripheral counterparts in terms of return gap (execution shortfall). This outperformance is more pronounced when funds experience large outflows and for large trades in less liquid stocks. Central brokers can deliver superior trade execution compared to peripheral brokers, but mainly for central institutions. We use the collapse of Lehman Brothers as a quasi-natural experiment to establish the likely causality of our findings.