Financial Intermediaries and Agency Problems With and Without Vertical Incentives

• 成果类型: Article; Early Access
• 署名作者: Lee, Yeonjoon
• 署名单位: Federal Reserve System - USA; Federal Reserve Bank - Richmond
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2023.03572
• 发表日期: 2025
• 关键词: vertical incentives; BROKERS; Intermediaries; issuers; Agency problems

摘要

I study the role of vertical incentives between upstream issuers and downstream brokers in the retail bond market when there exist agency problems. Although arms-length transaction regulations require that vertical incentives not influence their activities, I show that both upstream issuers and downstream brokers are sensitive to vertical incentives. I then present a structural model in order to measure the degree of vertical incentives for downstream brokers, controlling for the extent of agency problems. The structural estimates show that brokers are willing to give up one dollar of their own profit if their vertically integrated issuer's profit goes up by 1.25 dollars.