We analyze the impact of non-compliance with a requirement similar to the Basel III Liquidity Coverage Ratio and its … non-compliance with a liquidity requirement causes banks to pay and charge higher interest rates as well as to increase … be affected by the requirement. While non-compliance with a liquidity requirement does not seem to directly affect …

During the recent financial crisis, central banks have provided liquidity and governments have set up rescue programmes … bank suffering from liquidity shocks, we find that the unregulated bank keeps too much liquidity and monitors too little. A … central bank can alleviate the liquidity problem, but induces moral hazard. Therefore, we introduce an additional authority …

banks have provided liquidity and ministries of finance have set up rescue programmes to restore confidence and stability …. Using a model of a systemic bank suffering from liquidity shocks, we find that the unregulated bank keeps too much liquidity … and takes excessive risk compared to the social optimum. A Lender of Last Resort can alleviate the liquidity problem, but …

faced by arbitrageurs can prevent them from eliminating mispricings and providing liquidity to other investors. Research in …

We examine how liquidity and asset prices are affected by the following market imperfections: asymmetric information …

they must deliver the asset they borrowed. That asset enjoys greater liquidity, measured by search times, and a higher … lending fee ('specialness'). Liquidity and specialness translate into price premia that are consistent with no-arbitrage. We …

, liquidity, and asset prices. Arbitrageurs exploit price discrepancies between assets traded in segmented markets, and in doing … so provide liquidity to investors. A collateral constraint limits their positions as a function of capital. We show that … markets, liquidity in each market generally becomes less volatile, but the reverse may hold for aggregate liquidity because of …

to liquidity assistance as a solution to forbearance. Faced with a bank that chooses capital and liquidity, the … institution providing liquidity assistance can commit to a mixed strategy: never bailing out is too costly and therefore not … credible, while always bailing out causes moral hazard. In equilibrium, the bank chooses above minimum capital and liquidity …

We develop a dynamic model of liquidity provision, in which hedgers can trade multiple risky assets with arbitrageurs … a non-negativity constraint. Liquidity is increasing in arbitrageur wealth, while asset volatilities, correlations, and … expected returns are hump-shaped. Liquidity is a priced risk factor: assets that suffer the most when liquidity decreases, e …