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When 'confidence' is lost, 'liquidity dries up.' We investigate the meaning of 'confidence' and 'liquidity' in the context of the current financial crisis. The financial crisis is a manifestation of an age-old problem with private money creation, banking panics. We explain this and provide some...
Persistent link: https://www.econbiz.de/10013151562
The Financial Crisis began and accelerated in short-term money markets. One such market is the multi-trillion dollar sale-and-repurchase (repo) market, where prices show strong reactions during the crisis. The academic literature and policy community remain unsettled about the role of repo runs,...
Persistent link: https://www.econbiz.de/10012898736
We show that individual investors over-extrapolate from their personal experience when making savings decisions. Investors who experience particularly rewarding outcomes from saving in their 401(k)-a high average and/or low variance return-increase their 401(k) savings rate more than investors...
Persistent link: https://www.econbiz.de/10012766994
The Panic of 2007-2008 was a run on the sale and repurchase market (the “repo” market), which is a very large, short-term market that provides financing for a wide range of securitization activities and financial institutions. Repo transactions are collateralized, frequently with securitized...
Persistent link: https://www.econbiz.de/10013095744