This paper examines financial regulation and distortionary taxes in a heterogeneous-agents economy with pecuniary …

We build a framework for modelling fire sales where banks face both liquidity and solvency constraints and choose which … that are liquid and held in small amounts, while banks constrained by the risk-weighted capital ratio and the liquidity … coverage ratio need to trade off assets' liquidity with their regulatory weights. We calibrate the model to the UK banking …

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 …

-competitive regulation underlying Open Banking projects in the EU, UK, Australia and other jurisdictions as the true game-changer approach …

then proceeds by detailing how an ill-designed policy framework, relying on supposed market approaches to regulation … – including self-regulation and credit rating agencies – enabled TBTF financial institutions to game the system and thereby …