MARKET-STRUCTURE AND INEFFICIENCY IN THE FOREIGN-EXCHANGE MARKET

Authors
FLOOD MD
Citation
Md. Flood, MARKET-STRUCTURE AND INEFFICIENCY IN THE FOREIGN-EXCHANGE MARKET, Journal of international money and finance, 13(2), 1994, pp. 131-158
Citations number
53
Categorie Soggetti
Business Finance
Journal title
Journal of international money and finance → ACNP
ISSN journal
02615606
Volume
13
Issue
2
Year of publication
1994
Pages
131 - 158
Database
ISI
SICI code
0261-5606(1994)13:2<131:MAIITF>2.0.ZU;2-G
Abstract
This paper investigates the intradaily operational efficiency of the U S foreign exchange market by conducting computer simulation experiment s with market structure (the numbers of market-makers, brokers and cus tomers). The results indicate significant operational inefficiencies w hich can be explained by temporary inventory imbalances inherent in a decentralized market. The results also suggest that much of this ineff iciency could be alleviated through a centralization of price informat ion.