On 3 July 2015, SUERF organized its sixth joint conference with the Bank of Finland in Helsinki on the subject of liquidity and market efficiency. The one-day program consisted of an opening speech, six presentations, including three keynotes, and a lunchtime address. The present SUERF Study...

There is substantial evidence that new banks and rapidly growing banks are risk prone. We study this problem by designing a relationship-lending model in which a bank operates as a financial intermediary and centralised monitor. In the absence of deposit insurance, the bank’s limited liability...

The aim of this research is to provide new insights about the limits of borrowing. The second chapter contributes to the theory of limits of borrowing by a study of LOLRs in an original model. The third chapter introduces a new approach to test and measure the limits of borrowing...

We study the long standing issue of whether markets can supply banks with sufficient liquidity or whether markets should be complemented with a lender of last resort (LOLR). For this purpose, we develop an extended version of the recent model of Holmström and Tirole (1998) on the supply of...

The paper considers a model in which limited liability causes an asset substitution problem for banks. The problem can at times become so severe that the current regulatory framework – based on a combination of effectively full deposit insurance, minimum capital requirements and prudential...

In autumn of 2007 Britain experienced its first bank run of any significance since the reign of Queen Victoria. The run was on a bank called Northern Rock. This was extraordinary, for Britain had been free of such episodes because by early in the third quarter of the 19th century the Bank of...

We sketch a theoretical framework for comparing the properties of funded LOLR schemes. We construct an idealized lender of last resort and investigate how it formulates policy under alternative public and private governance structures. The alternatives are a (first-best) social utility maximizer...

We build a model of firm-level innovation, productivity growth and reallocation featuring endogenous entry and exit. A key feature is the selection between high- and low-type firms, which differ in terms of their innovative capacity. We estimate the parameters of the model using detailed US...

The Hilbert-Huang transform (HHT) was developed late last century but has still to be introduced to the vast majority of economists. The HHT transform is a way of extracting the frequency mode features of cycles embedded in any time series using an adaptive data method that can be applied...