We study the long standing issue of whether markets can supply banks with sufficient liquidity or whether markets … model of Holmström and Tirole (1998) on the supply of liquidity to firms. H&Ts original model analyses liquidity supply to … problems associated with transitory liquidity outflows, even absent any change in a bank's value. Our premise is that the scope …

In this paper, I develop a model that addresses the links between banks’ liquidity outlook and their incentives to take … credit risk. Assuming that both bank-specific liquidity shocks and credit losses are necessary to provoke bank runs, the …-specific liquidity shock declines. This suggests that the benign liquidity outlook prevailing prior to the subprime crisis may have …

systemic risks, to analyze liquidity usage, to test or develop new system structures, and to study participants’ behavior. The …