We develop a theoretical model examining the financial stability policy of a central bank serving as both the lender of last resort and the regulator of the financial system. The model accommodates the possibility of financial contagion through interbank market linkages, and adverse feedback...

Enhanced regulatory oversight and greater regulatory uncertainty in the aftermath of the 2007/08 financial crisis contribute to changes in the liquidity provision profile of hedge funds. Analysing a sample of 1,624 funds operating during these major shifts in regulatory policy, we find that...