network. We first provide a characterization of the unique equilibrium of banks' liquidity holdings for any network of credit … aggregate liquidity holdings. This incurs an implicit cost, since these funds could be invested in the more productive illiquid …

This paper examines the impact of exogenous liquidity shocks in the unsecured interbank market. We evaluate the effects … of idiosyncratic liquidity shocks - arising from deposits outflow at the bank level - and of the aggregate liquidity … shock related to the U.S. tapering observed between May and September of 2013. We find that both liquidity shocks are …

demand for liquidity in the interbank market as wells as banks' access to this market. Results indicate that riskier banks … pay higher prices and borrow less liquidity, concurrent with the existence of market discipline. More capitalized and … higher prices and hoard liquidity when liquidity positions across them are more imbalanced and during a monetary policy …

This paper shows that depending on the distribution of banks' uncertain liquidity needs and on how monetary policy is …

This paper shows that depending on the distribution of banks' uncertain liquidity needs and on how monetary policy is …

We develop a model in which financial intermediaries hold liquidity to protect themselves from shocks. Depending on … parameter values, banks may choose to hold too much or too little liquidity on aggregate compared with the socially optimal … underinsurance against liquidity choice. The model therefore provides a unified framework for thinking, on the one hand, about policy …

central bank's liquidity policy. In October 2011, to encourage interbank trading, banks were allotted quotas for their … market operations to counteract not only temporary liquidity shortfalls, but also surpluses. We document substantially higher …

according to a Basel II or III macro-prudential frameworks and manage their liquidity in the interbank market. The Central Bank … crises and the emergence of deep downturns. This requires the timely intervention of the Central Bank as a liquidity lender … the Liquidity Coverage Ratio spurs financial instability by increasing the pro-cyclicality of banks' liquid reserves, a …