This paper summarizes and explains the main events of the liquidity and credit crunch in 2007-08. Starting with the …

We provide a model that links an asset's market liquidity - i.e., the ease with which it is traded - and traders …' funding liquidity - i.e., the ease with which they can obtain funding. Traders provide market liquidity, and their ability to … are charged, depend on the assets' market liquidity. We show that, under certain conditions, margins are destabilizing and …

overshooting and a reduced liquidation value for the distressed trader. Hence, the market is illiquid when liquidity is most needed …

over faster than domestic assets because the former have desirable liquidity properties, but represent inferior saving …

Financial assets provide return and liquidity services to their holders. However, during severe financial crises many … asset prices plummet, destroying their liquidity provision function at the worst possible time. In this paper we present a … not control or understand. The liquidity of the market quickly vanishes and a financial crisis ensues. The model exhibits …

emerging economy, and those affecting borrowing from foreign lenders. This 'dual liquidity' model offers a parsimonious …

liquidity and liability management more generally …