Acharya, Viral V.; Shin, Hyun Song; Yorulmazer, Tanju - 2009
Banks' liquidity is a crucial determinant of the adversity of banking crises. In this paper, we consider the effect of … purchasing assets. There is also a social benefit since greater banking system liquidity reduces inefficiency from liquidation of … markets, banks hold less liquidity than is socially optimal due to risk-shifting incentives; otherwise, banks may hold even …