Informed trading, liquidity provision, and central bank communications

Activity: Talk or presentationPresentation at conference/workshop/seminar

Description

The presented paper examines whether investor composition contributes to shaping market liquidity around scheduled central bank communications. By analyzing transaction-level data, our difference-in-differences analyses reveal that domestic and foreign institutional investors’ roles switch following the news announcements. The participation of domestic (foreign) institutions is negatively (positively) associated with liquidity provision shortly after the announcements, whereas they are liquidity providers (consumers) in general. Domestic individuals remain largely noisy. Our overall results imply that institutional investors’ information depends on news announcements and support the existence of adverse selection costs.
2022 Fall Conference by Korean Financial Management Association is hosted by Korean Financial Management Association. The on-site conference was located at Pusan National University (Busan, Republic of Korea).
Period11 Nov 2022
Event title2022 Fall Conference by Korean Financial Management Association
Event typeConference
LocationBusan, Korea, Republic ofShow on map