In the presence of macroeconomic shocks severe enough to threaten the liquidity or solvency of the banking system, the …

illiquid assets or underprovision of liquidity. We investigate whether imperfect competition (Cournot) improves welfare through … internalizing the externality and find that this is far from guaranteed. In a standard model of liquidity shocks, when liquidity is … sufficiently scarce, Cournot competition leads to even less liquidity than the Walrasian equilibrium. In a standard model of …

This paper contributes to the debate on liquidity in resolution by providing a quantitative assessment of liquidity … gaps of banks in resolution in the euro area. It estimates possible ranges of liquidity gaps for significant banks under … different assumptions and scenarios. The findings suggest that, while the average liquidity gaps in resolution are limited, the …

We develop a dynamic model of banking to assess the effects of liquidity and leverage requirements on banks' insolvency … regulatory requirements. Our analytic characterization of the bank policy choices shows that imposing solely liquidity … requirements leads to lower bank losses in default at the cost of an increased likelihood of default. Combining liquidity …