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description Publicationkeyboard_double_arrow_right Preprint 2007 SSHRC, NSF | Mechanism Design and Paym...SSHRC ,NSF| Mechanism Design and Payment Systems AnalysisAuthors: Thorsten Koeppl; Cyril Monnet; Theodosios Temzelides;Thorsten Koeppl; Cyril Monnet; Theodosios Temzelides;The authors study the design of efficient intertemporal payment arrangements when the ability of agents to perform certain welfare-improving transactions is subject to random and unobservable shocks. Efficiency is achieved via a payment system that assigns balances to participants, adjusts them based on the histories of transactions, and periodically resets them through settlement. Their analysis addresses two key issues in the design of actual payment systems. First, efficient use of information requires that agents participating in transactions that do not involve monitoring frictions subsidize those that are subject to such frictions. Second, the payment system should explore the trade-off between higher liquidity costs from settlement and the need to provide intertemporal incentives. In order to counter a higher exposure to default, an increase in settlement costs implies that the volume of transactions must decrease, but also that the frequency of settlement must increase. ; Also issued as Payment Cards Center Discussion Paper No. 07-14
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For further information contact us at helpdesk@openaire.eudescription Publicationkeyboard_double_arrow_right Preprint 2007 SSHRC, NSF | Mechanism Design and Paym...SSHRC ,NSF| Mechanism Design and Payment Systems AnalysisAuthors: Thor Koeppl; Cyril Monnet; Ted Temzelides;Thor Koeppl; Cyril Monnet; Ted Temzelides;We use mechanism design to study efficient intertemporal payment arrangements when the ability of agents to perform certain welfare-improving transactions is subject to random and unobservable shocks. Efficiency is achieved via a payment system that assigns balances to participants, adjusts them based on the histories of transactions, and periodically resets them through settlement. Our analysis has several implications for the design of actual payment systems. Efficiency requires that, in order to overcome informational frictions, agents participating in transactions that do not involve monitoring frictions subsidize those that are subject to such frictions. Optimal settlement frequency should balance liquidity costs from settlement against the need to provide intertemporal incentives. Settlement costs must be borne by agents for whom the incentives to participate in the system are highest. Finally, an increase in settlement costs implies that, in order to counter a higher exposure to default, the frequency of settlement must increase and, at the same time, the volume of transactions must decrease.
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For further information contact us at helpdesk@openaire.eu0 citations 0 popularity Average influence Average impulse Average Powered by BIP!more_vert All Research productsarrow_drop_down <script type="text/javascript"> <!-- document.write('<div id="oa_widget"></div>'); document.write('<script type="text/javascript" src="https://www.openaire.eu/index.php?option=com_openaire&view=widget&format=raw&projectId=od_______645::0aeba6439748fc60b9c2b57d2c94774b&type=result"></script>'); --> </script>
For further information contact us at helpdesk@openaire.eudescription Publicationkeyboard_double_arrow_right Preprint 2005 SSHRC, NSF | Mechanism Design and Paym...SSHRC ,NSF| Mechanism Design and Payment Systems AnalysisAuthors: Ted Temzelides; Cyril Monnet; Thor Koeppl;Ted Temzelides; Cyril Monnet; Thor Koeppl;We use mechanism design in order to study efficient arrangements when the ability of agents to perform certain welfare-improving transactions is subject to random and unobservable shocks. We study implementation via a payment system that involves assigning balances to participants and optimally adjusting these balances given their histories of transactions. Our analysis has several implications for the design of payment systems. Efficiency requires that, in order to overcome informational frictions, transactions that are subject to high monitoring costs need to be subsidized. Optimal settlement frequency should balance the fixed cost of settlement against the costs arising from providing intertemporal incentives. Settlement costs must be borne by those participants for whom certain participation constraints are slack.
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For further information contact us at helpdesk@openaire.eu0 citations 0 popularity Average influence Average impulse Average Powered by BIP!more_vert All Research productsarrow_drop_down <script type="text/javascript"> <!-- document.write('<div id="oa_widget"></div>'); document.write('<script type="text/javascript" src="https://www.openaire.eu/index.php?option=com_openaire&view=widget&format=raw&projectId=od_______645::9c80659b5cf1ca01d81f2fc8acde3856&type=result"></script>'); --> </script>
For further information contact us at helpdesk@openaire.eudescription Publicationkeyboard_double_arrow_right Article , Research , Preprint , Other literature type 2012Elsevier BV SSHRC, NSF | Mechanism Design and Paym...SSHRC ,NSF| Mechanism Design and Payment Systems AnalysisAuthors: Thorsten Koeppl; Cyril Monnet; Ted Temzelides;Thorsten Koeppl; Cyril Monnet; Ted Temzelides;handle: 10419/67750
Clearinghouses support financial trades by keeping records of transactions and by providing liquidity through short-term credit that is periodically cleared by participants. We study efficient clearing arrangements for formal exchanges, where traders must clear with a clearinghouse, and for over-the-counter (OTC) markets, where trades can be cleared bilaterally. When clearing is costly, we show that it can be efficient to subsidize the clearing process for OTC transactions by charging a higher price for the clearing of transactions in exchanges. This necessitates a clearinghouse that operates across both markets. As a clearinghouse offers credit, intertemporal incentives are needed in order to ensure settlement. An increase in the costs of liquidity provision worsens the incentives to settle. Hence, when liquidity costs increase, concerns about default must lead to a tightening of liquidity provision.
add ClaimPlease grant OpenAIRE to access and update your ORCID works.This Research product is the result of merged Research products in OpenAIRE.
You have already added works in your ORCID record related to the merged Research product.This Research product is the result of merged Research products in OpenAIRE.
You have already added works in your ORCID record related to the merged Research product.All Research productsarrow_drop_down <script type="text/javascript"> <!-- document.write('<div id="oa_widget"></div>'); document.write('<script type="text/javascript" src="https://www.openaire.eu/index.php?option=com_openaire&view=widget&format=raw&projectId=10.1016/j.jfineco.2011.08.008&type=result"></script>'); --> </script>
For further information contact us at helpdesk@openaire.eu50 citations 50 popularity Top 10% influence Top 10% impulse Top 10% Powered by BIP!more_vert add ClaimPlease grant OpenAIRE to access and update your ORCID works.This Research product is the result of merged Research products in OpenAIRE.
You have already added works in your ORCID record related to the merged Research product.This Research product is the result of merged Research products in OpenAIRE.
You have already added works in your ORCID record related to the merged Research product.All Research productsarrow_drop_down <script type="text/javascript"> <!-- document.write('<div id="oa_widget"></div>'); document.write('<script type="text/javascript" src="https://www.openaire.eu/index.php?option=com_openaire&view=widget&format=raw&projectId=10.1016/j.jfineco.2011.08.008&type=result"></script>'); --> </script>
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description Publicationkeyboard_double_arrow_right Preprint 2007 SSHRC, NSF | Mechanism Design and Paym...SSHRC ,NSF| Mechanism Design and Payment Systems AnalysisAuthors: Thorsten Koeppl; Cyril Monnet; Theodosios Temzelides;Thorsten Koeppl; Cyril Monnet; Theodosios Temzelides;The authors study the design of efficient intertemporal payment arrangements when the ability of agents to perform certain welfare-improving transactions is subject to random and unobservable shocks. Efficiency is achieved via a payment system that assigns balances to participants, adjusts them based on the histories of transactions, and periodically resets them through settlement. Their analysis addresses two key issues in the design of actual payment systems. First, efficient use of information requires that agents participating in transactions that do not involve monitoring frictions subsidize those that are subject to such frictions. Second, the payment system should explore the trade-off between higher liquidity costs from settlement and the need to provide intertemporal incentives. In order to counter a higher exposure to default, an increase in settlement costs implies that the volume of transactions must decrease, but also that the frequency of settlement must increase. ; Also issued as Payment Cards Center Discussion Paper No. 07-14
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For further information contact us at helpdesk@openaire.eu0 citations 0 popularity Average influence Average impulse Average Powered by BIP!more_vert All Research productsarrow_drop_down <script type="text/javascript"> <!-- document.write('<div id="oa_widget"></div>'); document.write('<script type="text/javascript" src="https://www.openaire.eu/index.php?option=com_openaire&view=widget&format=raw&projectId=od_______645::bffc9c9344151822a5c8ddb9ae932f10&type=result"></script>'); --> </script>
For further information contact us at helpdesk@openaire.eudescription Publicationkeyboard_double_arrow_right Preprint 2007 SSHRC, NSF | Mechanism Design and Paym...SSHRC ,NSF| Mechanism Design and Payment Systems AnalysisAuthors: Thor Koeppl; Cyril Monnet; Ted Temzelides;Thor Koeppl; Cyril Monnet; Ted Temzelides;We use mechanism design to study efficient intertemporal payment arrangements when the ability of agents to perform certain welfare-improving transactions is subject to random and unobservable shocks. Efficiency is achieved via a payment system that assigns balances to participants, adjusts them based on the histories of transactions, and periodically resets them through settlement. Our analysis has several implications for the design of actual payment systems. Efficiency requires that, in order to overcome informational frictions, agents participating in transactions that do not involve monitoring frictions subsidize those that are subject to such frictions. Optimal settlement frequency should balance liquidity costs from settlement against the need to provide intertemporal incentives. Settlement costs must be borne by agents for whom the incentives to participate in the system are highest. Finally, an increase in settlement costs implies that, in order to counter a higher exposure to default, the frequency of settlement must increase and, at the same time, the volume of transactions must decrease.
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For further information contact us at helpdesk@openaire.eu0 citations 0 popularity Average influence Average impulse Average Powered by BIP!more_vert All Research productsarrow_drop_down <script type="text/javascript"> <!-- document.write('<div id="oa_widget"></div>'); document.write('<script type="text/javascript" src="https://www.openaire.eu/index.php?option=com_openaire&view=widget&format=raw&projectId=od_______645::0aeba6439748fc60b9c2b57d2c94774b&type=result"></script>'); --> </script>
For further information contact us at helpdesk@openaire.eudescription Publicationkeyboard_double_arrow_right Preprint 2005 SSHRC, NSF | Mechanism Design and Paym...SSHRC ,NSF| Mechanism Design and Payment Systems AnalysisAuthors: Ted Temzelides; Cyril Monnet; Thor Koeppl;Ted Temzelides; Cyril Monnet; Thor Koeppl;We use mechanism design in order to study efficient arrangements when the ability of agents to perform certain welfare-improving transactions is subject to random and unobservable shocks. We study implementation via a payment system that involves assigning balances to participants and optimally adjusting these balances given their histories of transactions. Our analysis has several implications for the design of payment systems. Efficiency requires that, in order to overcome informational frictions, transactions that are subject to high monitoring costs need to be subsidized. Optimal settlement frequency should balance the fixed cost of settlement against the costs arising from providing intertemporal incentives. Settlement costs must be borne by those participants for whom certain participation constraints are slack.
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For further information contact us at helpdesk@openaire.eu0 citations 0 popularity Average influence Average impulse Average Powered by BIP!more_vert All Research productsarrow_drop_down <script type="text/javascript"> <!-- document.write('<div id="oa_widget"></div>'); document.write('<script type="text/javascript" src="https://www.openaire.eu/index.php?option=com_openaire&view=widget&format=raw&projectId=od_______645::9c80659b5cf1ca01d81f2fc8acde3856&type=result"></script>'); --> </script>
For further information contact us at helpdesk@openaire.eudescription Publicationkeyboard_double_arrow_right Article , Research , Preprint , Other literature type 2012Elsevier BV SSHRC, NSF | Mechanism Design and Paym...SSHRC ,NSF| Mechanism Design and Payment Systems AnalysisAuthors: Thorsten Koeppl; Cyril Monnet; Ted Temzelides;Thorsten Koeppl; Cyril Monnet; Ted Temzelides;handle: 10419/67750
Clearinghouses support financial trades by keeping records of transactions and by providing liquidity through short-term credit that is periodically cleared by participants. We study efficient clearing arrangements for formal exchanges, where traders must clear with a clearinghouse, and for over-the-counter (OTC) markets, where trades can be cleared bilaterally. When clearing is costly, we show that it can be efficient to subsidize the clearing process for OTC transactions by charging a higher price for the clearing of transactions in exchanges. This necessitates a clearinghouse that operates across both markets. As a clearinghouse offers credit, intertemporal incentives are needed in order to ensure settlement. An increase in the costs of liquidity provision worsens the incentives to settle. Hence, when liquidity costs increase, concerns about default must lead to a tightening of liquidity provision.
add ClaimPlease grant OpenAIRE to access and update your ORCID works.This Research product is the result of merged Research products in OpenAIRE.
You have already added works in your ORCID record related to the merged Research product.This Research product is the result of merged Research products in OpenAIRE.
You have already added works in your ORCID record related to the merged Research product.All Research productsarrow_drop_down <script type="text/javascript"> <!-- document.write('<div id="oa_widget"></div>'); document.write('<script type="text/javascript" src="https://www.openaire.eu/index.php?option=com_openaire&view=widget&format=raw&projectId=10.1016/j.jfineco.2011.08.008&type=result"></script>'); --> </script>
For further information contact us at helpdesk@openaire.eu50 citations 50 popularity Top 10% influence Top 10% impulse Top 10% Powered by BIP!more_vert add ClaimPlease grant OpenAIRE to access and update your ORCID works.This Research product is the result of merged Research products in OpenAIRE.
You have already added works in your ORCID record related to the merged Research product.This Research product is the result of merged Research products in OpenAIRE.
You have already added works in your ORCID record related to the merged Research product.All Research productsarrow_drop_down <script type="text/javascript"> <!-- document.write('<div id="oa_widget"></div>'); document.write('<script type="text/javascript" src="https://www.openaire.eu/index.php?option=com_openaire&view=widget&format=raw&projectId=10.1016/j.jfineco.2011.08.008&type=result"></script>'); --> </script>
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