does not need a high liquidity reserve, but as conditions deteriorate, it will target higher reserve. In very poor … conditions, the firm will declare bankruptcy, usually after it has depleted its liquidity reserve. Our model can predict … liquidity holdings, leverage ratios, yield spreads, expected default probabilities, expected loss given default and equity …

banks to have private information about the risk of their assets. We show how banks' asset risk affects funding liquidity in … state with adverse selection and elevated rates; and iii) market breakdown with liquidity hoarding. We provide an … of unsecured rates and excess reserves banks hold, as well as the inability of massive liquidity injections by central …

, the evidence is supportive of theoretical models which imply that funding liquidity risk faced by financial intermediaries … a novel dataset, we document that this sell-off appears to have generated significant liquidity risk for market … actual downgrade and reversing sharply thereafter. We show that a measure of liquidity risk faced by corporate bond market …