How do the liquidity functions of banks affect investment and growth at different stages of economic development? How … issues using an overlapping generations growth model where agents, who experience idiosyncratic liquidity shocks, can invest … in a liquid storage technology or in a partially illiquid Cobb Douglas technology. By pooling liquidity risk, banks play …

corporations and use it to re-examine the existing findings on corporate liquidity. We show that the availability of credit lines …-off theory of liquidity according to which firms target an optimum level of liquidity, computed as the sum of cash and undrawn … credit lines. We provide support for the existence of a liquidity target, but also show that the reasons why firms hold cash …

liquidity, the severity of macroeconomic fluctuations becomes endogenously linked to the magnitudes of information dispersion …

trading in which insiders provide price support, as well as liquidity, in security markets. Consistent with the model …

financial intermediaries implement liquidity risk sharing among depositors. We show that at early stages of economic development … economy has crossed certain wealth threshold, the liquidity role of banks becomes unambiguously growth enhancing. As wealth … increases, banks offer improving liquidity insurance, and higher growth; however, for high levels of wealth, growth generated by …

insurance against liquidity shocks that may endanger the survival of their customers. The relatively high implicit interest …

This paper shows how to introduce liquidity into the well known mean-variance framework of portfolio selection. Either … by estimating mean-variance liquidity constrained frontiers or directly estimating optimal portfolios for alternative … levels of risk aversion and preference for liquidity, we obtain strong effects of liquidity on optimal portfolio selection …