English (United Kingdom)

https://curated-unify.zendy.io/wp-json/zendy-region/v1/featured_content/oa?rat=en

https://curated-unify.zendy.io/wp-json/zendy-region/v1/highlighted_journal/

Global: Zendy Plus annual

Presents the access of premium content as premium feature

Premium Content

Presents the keyphrase highlighting as premium feature

Keyphrase Highlighting

Presents the summarisation as premium feature

Summarisation

Insights

Presents the pdf analysis as premium feature

PDF Analysis

Presents the zaia usage as premium feature

ZAIA

Global: Zendy Plus monthly

Global: Zendy Tools annual

Global: Zendy Tools monthly

Global: Zendy Free Plan

I study the limit of a large random economy, where a set of consumers investsin financial instruments engineered by banks, in order to optimize their futureconsumption. This exercise shows that, even in the ideal case of perfectcompetition, where full information is available to all market participants,the equilibrium develops a marked vulnerability (or susceptibility) to marketimperfections, as markets approach completeness and transaction costs vanish.The decrease in transaction costs arises because financial institutions exploittrading instruments to hedge other instruments. This entails trading volumes inthe interbank market which diverge in the limit of complete markets.  These results suggest that the proliferation of financial instrumentsexacerbates the effects of market imperfections, calling for theories of marketas interacting systems. From a different perspective, in order to prevent anescalation of perverse effects, markets may necessitate institutionalstructures which are more and more conspicuous as their complexity expands.

Spiraling toward market completeness and financial instability