drying up of liquidity. Financial firms raise short-term debt in order to finance asset purchases. When asset fundamentals … worsen, debt induces firms to risk-shift; this limits their funding liquidity and their ability to roll over debt. Firms may … de-lever by selling assets to better-capitalized firms. Thus the market liquidity of assets depends on the severity of …

Is greater trading liquidity good or bad for corporate governance? We address this question both theoretically and … information concerns her own plans for taking an active role in governance. We show that an increase in the liquidity of the firm …'s stock increases the likelihood of the large investor 'taking the Wall Street walk.' Thus, higher liquidity is harmful for …

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 …

question, focusing on liquidity constraints and uninsurable idiosyncratic risk. We consider a search model where agents use … reserves and the response of the economy tends to be larger. In this case, agents expect to be liquidity constrained and, due …

We study the interplay between corporate liquidity and asset reallocation opportunities. Our model shows that … associated with the merger. We call these transactions "liquidity mergers," since their main purpose is to reallocate liquidity … to firms that might be otherwise inefficiently terminated. We show that liquidity mergers are more likely to occur when …

This paper is concerned with the theory of saving when consumers are not permitted to borrow, and with the ability of … such a theory to account for some of the stylized facts of saving behavior. When consumers are relatively impatient, and … labor income is a random walk, it is optimal for impatient liquidity constrained consumers simply to consume their incomes …

Using data on exogenous liquidity losses generated by the fraud and failure of a cash-in-transit firm, we demonstrate a … causal impact on firms' trade credit usage. We find that firms manage liquidity shortfalls by increasing the amount of drawn … economically important sources of reserve liquidity. The underlying mechanism in trade credit adjustments is in part due to shifts …

liquidity. When liquidity is low, relationships are subject to breakups that lead to loss of joint surplus. Liquidity outflows …