Repo auctions are multiunit auctions regularly used by central banks to inject liquidity into the banking sector. Banks …

We identify frictions in the market for liquidity as well as bank-specific and market-wide factors that affect the … prices that banks pay for liquidity, captured here by borrowing rates in repos with the central bank and benchmarked by the … liquidity. We find that the price a bank pays for liquidity depends on the liquidity positions of other banks, as well as its …

liquidity is inefficient. The reason is that liquidity affects prices and the welfare of others, and creators do not internalize … government must restrict the creation of liquidity by the private sector. …

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 …

institutions. The reason is that agents in need of liquidity tend to concentrate their holdings in banks. Thus, a shock to banks … disproportionately affects the agents who need liquidity the most, reducing aggregate demand and the level of economic activity. The …

We study the liquidity demand of large settlement (first-tier) banks in the UK and its effect on the Sterling Money … Markets before and during the sub-prime crisis of 2007-08. Liquidity holdings of large settlement banks experienced on average … banks to park liquidity at the central bank rather than lend in the market. We show that following this structural break …