We show that stricter bank liquidity standards can trigger unintended credit booms when there is heterogeneity in … interbank pricing power. Attempts to circumvent the regulation change the allocation of savings across institutions, eliciting …

simple regulation -- a liquidity requirement -- that corrects such an externality by affecting the interest rate on the … markets. We characterize the form of the optimal liquidity adequacy requirement for a general class of preferences. We show … that whether markets underprovide or overprovide liquidity, and whether a liquidity cap or a liquidity floor should be used …

dire consequences in terms of under-provision of market liquidity, has been repeatedly raised. This paper presents … systematic evidence from four different estimation strategies of the absence of breakpoints in market liquidity for fixed …-income asset classes and across multiple liquidity measures, with special attention given to the corporate bond market. The …

bailouts are costly because they worsen incentives and thereby reduce welfare. We show that regulation in the form of limits on … undertake bailouts. In terms of the cyclical properties of regulation, we show that regulation should be tightest in aggregate … time inconsistent in the sense that, without commitment, governments have incentives to bail out firms by buying up the …

more than long-term credit. Firms responded by cutting their short-term loans for liquidity management purposes and …, firms increase cash and cut investment. Thus, trade credit offers a substitute source of liquidity that can insulate some … firms from bank liquidity shocks …

I consider banks' role in providing funding liquidity (the ability to raise cash on demand) and market liquidity (the … liquid deposits, thus producing funding liquidity on the liability side of the balance sheet. Deposits are less important in … 21st century banks, but funding liquidity from lines of credit and loan commitments has become more important. Banks also …

Both investors and borrowers are concerned about liquidity. Investors desire liquidity because they are uncertain about … when they will want to eliminate their holding of a financial asset. Borrowers are concerned about liquidity because they … compensation for the illiquidity investors will be subject to. We argue that banks can resolve these liquidity problems that arise …

Banks are unique among financial institutions because they are the cheapest source of liquidity in the economy. Banks … liquidity. Since the cost of reserves falls on all issuers of less liquid liabilities seeking access to payment services …, including non-bank intermediaries, reserves cannot represent a tax on the banking system alone …

-Wicksellian model and then adds banks and a role for bonds in the liquidity management of households and banks. The Banks and Bonds …