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- Title
On the Effectiveness of the Federal Reserve's Margin Requirement.
- Authors
LUCKETT, DUDLEY G.
- Abstract
A portfolio-theoretic model of the optimal margin account is developed. It is argued that the Federal Reserve's goal in setting the margin requirement is to influence investor equity ratios. Using the average equity ratio as the dependent variable and the arguments of the model as independent variables, an empirical model is estimated. It is concluded that the margin requirement is an effective regulatory tool.
- Subjects
UNITED States; MARGIN accounts; PORTFOLIO management (Investments); INVESTMENTS; MONETARY policy; MARGIN requirements; INVESTORS; ECONOMIC models; FEDERAL Reserve monetary policy; FINANCIAL ratios
- Publication
Journal of Finance (Wiley-Blackwell), 1982, Vol 37, Issue 3, p783
- ISSN
0022-1082
- Publication type
Article
- DOI
10.1111/j.1540-6261.1982.tb02223.x