This paper shows how uncertainties about funding in an interwoven system of intermediation can lead to excessive liquidity hoarding. In the model, funds are channeled through several financial intermediaries (banks) until they are finally invested in real assets. In case of a funding shock,...

We introduce a novel simulation-based network approach, which provides full-fledged distributions of potential interbank losses. Based on those distributions we propose measures for (i) systemic importance of single banks, (ii) vulnerability of single banks, and (iii) vulnerability of the whole...

This paper investigates how learning agents perform in inter-bank lending markets. Using policy gradient reinforcement learning agents, we demonstrate the adaptive learning banks can endogenously form liquidity hoarding phenomenon under an exogenous shock to the system. We also simulate the...