We examine how liquidity and asset prices are affected by the following market imperfections: asymmetric information …

investment in liquidity can be minimized, and the expected utility of uninformed agents thus increased. The role of banks is …

consumers face uncertain liquidity needs. The ambiguity the consumers experience is modeled by the degree of confidence in their … additive beliefs. We analyze the optimal liquidity allocation and two institutional settings for implementing this allocation … with high liquidity needs. With increasing ambiguity this preference will be reversed: the asset market is preferred, since …

, and makes relatively healthy banks, and hence potential asset buyers, reluctant to buy. The liquidity of the market …

determinants of market liquidity in decentralized markets, we are going to analyze this question in a competitive market setting … liquidity. The resulting friction therefore prohibits resources from reallocating efficiently. In the application of capital … reallocation, we further show that this trading friction can generate significant economic fluctuations. -- Liquidity ; Search …