This paper studies the relationship between liquidity demand risk, deposit diversification and insurance in 12 … countries during the period 2005-2014. We capture liquidity risk by focusing on the unfunded loan commitments. We find that … higher diversification in the deposit base can reduce the impact of liquidity demand risk during the crisis by decreasing the …

Banks may be reluctant to remove bad loans from their portfolios during liquidity shortfalls, giving rise to a moral … hazard problem. In this paper, we analyze how liquidity shortages affect the ability of the interbank market to provide … liquidity in a moral hazard setting. We distinguish two types of liquidity shocks that arise due to a deposit flight (a …