What have we Learned from the 2007-08 Liquidity Crisis? A Survey

The financial crisis of 2007-2008 was a liquidity crisis. Thus we must both study the source of the crisis and evaluate the regulatory measures to address it. How was this liquidity crisis and its associated risk related to other forms of risk? What was the nature of the vicious cycle that produced the crisis? How did the regulators respond and have continued to respond? What are some quantitative dimensions of the liquidity risk measure? We provide a critical survey of the existing literature in an attempt to answer these questions.