Caballero, Ricardo J.; Simsek, Alp - 2009
option but to withdraw from loan commitments and illiquid positions. A flight-to-quality ensues, and the financial crisis … financial institutions (banks, for short), becomes exceedingly complex. Confusion and uncertainty follow, ravaging financial … markets and triggering massive flight-to-quality episodes. In this paper we propose a model of this phenomenon. In our model …