We study how banks' capital level affects the extent to which they engage in liquidity transformation. We first …-ons. We find that banks engage in less liquidity transformation when their capital increases, which suggests that capital and … liquidity requirements are at least to some extent substitutes. We also find that this substitution is mostly driven by small …

This paper proposes a positive theory of the link between banks’ capitalisation and their liquidity-risk taking as well … as the severity of fire-sale problems and liquidity crises. In the basic framework of an individual bank’s decisions, we … find that banks’ incentives to hold liquidity for precautionary reason are increasing with their capital. In a continuum …

Since the 2007–09 crisis, tougher bank liquidity regulation has been imposed which aims to ensure banks an survive a … related to liquidity, therefore offsetting some of the costs from higher liquidity requirements. We find evidence for this … relationship using post-crisis data for US banks, implying that liquidity requirements may be less costly than previously thought …

Since the 2007–09 crisis, tougher bank liquidity regulation has been imposed which aims to ensure banks can survive a … related to liquidity, therefore offsetting some of the costs from higher liquidity requirements. We find evidence for this … relationship using post-crisis data for US banks, implying that liquidity requirements may be less costly than previously thought …

their liquidity buffers from 1976 to the 2008 crisis. Diversified banks also hold more illiquid small business loans, less … liquid mortgages, and have higher net liquidity creation. During the crisis, however, better diversified banks hoard more … liquidity. These results suggest that diversification increases liquidity risk-taking capacity in normal times, and that …

We examine how banks' cross-border lending reacts to changes in liquidity regulation using a new dataset on Individual … Liquidity Guidance (ILG), which was enacted in the UK from 2000 to 2015 and is similar to the Basel III Liquidity Coverage Ratio …. A one percentage point increase in liquidity requirements to total assets reduces UK resident banks' cross …

liquidity in the Bank of England's (BoE) operations. Between 2010 and 2016 there was regular usage of two BoE facilities … facilities to meet their liquidity needs. Collateral assets used for FLS are less liquid, since almost all assets are loan … provide market liquidity without absorbing undue risks onto its balance sheet …

Banks' liquidity is a crucial determinant of the adversity of banking crises. In this paper, we consider the effect of … purchasing assets. There is also a social benefit since greater banking system liquidity reduces inefficiency from liquidation of … markets, banks hold less liquidity than is socially optimal due to risk-shifting incentives; otherwise, banks may hold even …

We build a framework for modelling fire sales where banks face both liquidity and solvency constraints and choose which … that are liquid and held in small amounts, while banks constrained by the risk-weighted capital ratio and the liquidity … coverage ratio need to trade off assets' liquidity with their regulatory weights. We calibrate the model to the UK banking …