I describe two amplifications mechanisms that operate during liquidity crises and discuss the scope for central bank … disengage from markets and increase their demand for liquidity. This behavior leads to a loss of liquidity and a crisis …

allows banks in different regions to smooth local liquidity shocks by borrowing and lending on a world interbank market. We … show under which conditions financial integration induces banks to reduce their liquidity holdings and to shift their … portfolios towards more profitable but less liquid investments. Integration helps reallocate liquidity when different banks are …

anomalous. The theory also exhibits rational expectations equilibria with recurring belief driven events that resemble liquidity … prices and standard measures of financial liquidity, such as bid-ask spreads, trade volume, and the incentives of dealers to …. The theory predicts that asset prices carry a speculative premium that reflects the asset's marketability and depends on …

-and-repurchase (repo) contracts. Exemption from an automatic stay in bankruptcy enables financial intermediaries to raise greater liquidity … and induces entry of intermediaries with higher leverage during normal times. This liquidity creation occurs, however, at … aggregate risk …

Credit market freezes in which debt issuance declines dramatically and market liquidity evaporates are typically … bonds declined, and secondary credit markets became highly illiquid. In this paper we analyze liquidity in bond markets … during financial crises and compare two main theories of liquidity in markets: (1) asymmetric information and adverse …

worsen, debt induces firms to risk-shift; this limits their funding liquidity and their ability to roll over debt. Firms may … drying up of liquidity. Financial firms raise short-term debt in order to finance asset purchases. When asset fundamentals … de-lever by selling assets to better-capitalized firms. Thus the market liquidity of assets depends on the severity of …

credit risk was increasing. Following the failure of Lehman Brothers, the interdependencies briefly increased to a new high … counterparty risk. After Lehman's failure, the prospect of global recession became imminent, auguring the further deterioration of …