We consider a model of liquidity demand arising from a possible maturity mismatch between asset revenues and … consumption. This liquidity demand can be met with either cash reserves (inside liquidity) or via asset sales for cash (outside … liquidity). The question we address is, what determines the mix of inside and outside liquidity in equilibrium? An important …

This paper studies the effect of stock liquidity on blockholders' choice of governance mechanisms. We focus on hedge … measure governance intent rather than only studying instances of actual governance. We find that liquidity increases the … likelihood that a hedge fund acquires a block in a firm. Conditional upon acquiring a stake, liquidity reduces the likelihood …

overshooting and a reduced liquidation value for the distressed trader. Hence, the market is illiquid when liquidity is most needed …

poor performance increases from zero to seven. We investigate how changes in funding and asset liquidity intensify this … expected to affect hedge fund funding liquidity adversely) and when stock market liquidity (a proxy for asset liquidity) is low …

funds act as liquidity providers. Hedge funds using Lehman as prime broker could not trade after the bankruptcy, and these …-connected hedge funds in turn experienced greater declines in market liquidity following the bankruptcy than other stocks; and, the … effect was larger for ex ante illiquid stocks. We conclude that shocks to traders' funding liquidity reduce the market …

This paper provides a model of the interaction between risk-management practices and market liquidity. On one hand …, tighter risk management reduces the maximum position an institution can take, thus the amount of liquidity it can offer to the … market. On the other hand, risk managers can take into account that lower liquidity amplifies the effective risk of a …