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This paper presents a model of the optimal bidding behaviour of a single bank in the context of fixed rate liquidity … tenders. Banks’ bidding is shown to depend crucially on the central bank’s liquidity policy as regards tender allotments. The …
Persistent link: https://www.econbiz.de/10005648869
This paper constructs an equilibrium model for the short-term money market, when the central bank provides liquidity via variable rate tenders. The relation between market rate of interest and liquidity is derived from a single bank’s profit maximisation problem in the interbank market, and...
Persistent link: https://www.econbiz.de/10005648870
bidding in the context of fixed rate liquidity tenders. It is shown that banks' bidding crucially depends on the central bank … models the money market equilibrium and analyses banks' bidding when the central bank uses variable rate tenders. The …
Persistent link: https://www.econbiz.de/10008774210