We empirically investigate why wholesale funding is fragile by providing the first study of how individual banks borrow …, we find that banks with low credit worthiness replace unsecured borrowing with secured loans. Moreover, riskier lenders … provide more secured loans to replace unsecured lending, which is not consistent with speculative or precautionary liquidity …

Under Basel III rules, banks become subject to a liquidity coverage ratio (LCR) from 2015 onwards, to promote short …-term resilience. We investigate the effects of such liquidity regulation on bank liquid assets and liabilities. Results indicate co …-integration of liquid assets and liabilities, to maintain a minimum short-term liquidity buffer. Still, microprudential regulation …

relationships consist predominantly of simple direct payments. Direct payments increase the surplus by avoiding the liquidity cost …

We explore the consequences of different financial frictions on the corporate and banking level for macroeconomic … frictions on macro outcomes increases when a larger part of working capital is financed through credit in addition to investment …. Debt overhang in banks leads to positive NPV loans being rejected; after an increase in equity, lending will increase in a …