ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846
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Effects of Multiple Arbitraging

The developments in the call money market in December 2006 have exposed the tenuous nature of the financial markets in a possible environment of liquidity shortages. A considerably unequal distribution in investment-deposit ratios creates scope for varied forms of arbitraging. Such arbitraging has been spawned by a situation of vast structural differences between different groups of players in the financial markets. These developments point to the substantially changed market structure, wherein arbitraging operations between markets, which are generally believed to remove misalignment of rates, have instead increased disparities.

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