Role mix, banking (mixed sides of the market in banking business)

Whereas in goods markets the roles (role: the proper or customary activity and action) of sellers and buyers are clearly separated, and thus certain behaviors are fixed – the seller wants to sell a good at the highest possible price, but not below its cost price, while the buyer wants to buy it at the lowest price – in financial markets, participants constantly switch sides: they buy and sell again. In securitization, too, banks are partly sellers by originating and selling the corresponding securities, and partly buyers by purchasing collateralized debt obligations from various pools. Many see this as the reason why the market mechanism in financial markets often fails and why turmoil occurs time and again. – See interbank money market, reintermediation, risk taker.

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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
E-mail address: info@ekrah.com
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