I revisit the Diamond-Dybvig model of liquidity insurance in the presence of hidden trades. The key result is that in … this environment deposit-taking banks are not necessary for the efficient provision of liquidity. Mutual funds are … constrained efficient when supplemented with the same government liquidity regulation that is required to make a banking system …

In this paper we introduce two measures, the Systemic Liquidity Buffer (SLB) and the Systemic Liquidity Shortfall (SLS …) to assess liquidity in the banking system. The SLB takes an aggregated perspective on liquidity risks in the banking … system. In contrast, the SLS focusses on the problematic banks which suffer a liquidity shortfall. These measures provide an …

We study the role of captive finance in the car loan market when manufacturers' liquidity demand increases. Using a new … multi-country dataset on securitized car loans, we show that captive lending enables a liquidity constrained integrated … exploit quasi-exogenous variation in manufacturers' liquidity cost and need following the Volkswagen emissions scandal to …

This study empirically investigates the relationship between banking integration and liquidity management. To measure … stress are more likely to face increased funding costs, create reduced liquidity, and originate declined small business loans … and mortgages. Those banks with more partners are shown to have a lower liquidity coverage ratio, suggesting that business …

We show that a liquidity shock can affect the solvency of a bank and cause its default if the bank does not hold enough … over one and two (short) periods relative to the liquidity risk and, more particularly, to liquidity shock scenarios on an … level of liquid assets allowing it to remain solvent for the different liquidity shock scenarios and for both periods (i …

We propose a novel theory of banks' liquidity management and financial fragility. Banks hold liquidity and an illiquid … depositors are sufficiently risk averse, banks manage their liquidity needs during runs following an endogenous pecking order …: they first deplete liquidity, and then liquidate the productive asset. Thus, under these conditions banks subject to runs …

policy and therefore ultimately the real economy. In particular, it facilitates banks' liquidity management. This paper aims … at extending the literature which views interbank markets as mutual liquidity insurance mechanism by taking into account … persistence of liquidity shocks. Following a theory of long-term interbank funding a financial system which is modeled as a micro …

empirically test the predictions of a new signalling model that offers a rationale for offering two different liquidity facilities … risky than banks that accessed the DW. Our results can contribute to a better design of liquidity facilities during a …