Simulating blood flow in microvessels is a major challenge because of the numerous blood cells suspended in the blood. Furthermore, red blood cells (RBCs), which constitute 45% of the total blood volume, are highly deformable. RBCs deformation and RBC-RBC interactions determine the complex rheology of the blood. In this research, we simulate the blood flow in periodic two dimensional channels and conduct numerical experiments on the cell-free layer which appears near the wall. We use the boundary integral method and the smooth particle mesh Ewald method to represent the blood flow, and cells are modeled as deformable capsules. In the numerical experiments, we examine four possible mechanisms that may contribute to the cell-free layer: RBC deformation, RBC aggregation, configuration constraint, and the lubrication mechanism. Our simulations correctly represent hemodynamic phenomena such as the blunt velocity profile and the Fåhræus effect. We observed that more deformable RBCs migrate more away from the wall, and, consequently, the thickness of the cell-free layer increases. However, RBC aggregation increased the cell-free layer thickness by only 5%. In the experiment on the configuration constraint, no cell-free "layer" was detected when we removed cells which intersected an artificial constraint in the microvessel. In the last experiment on the lubrication mechanism, the cell-free layer disappeared at a no-shear stress boundary, and the hematocrit profile was similar to that in the constraint test. Therefore, this research clearly shows that the cell-free layer is generated by the lateral migration of deformable RBCs due to the lubrication mechanism. / text