This paper presents a theory that explains why it is beneficial for banks to engage in circular lending activities on …

theory, focusing on the unsecured overnight loans settled from 2003 to 2017. The network, where banks are the nodes and the …

We study the liquidity allocation among European banks around the Lehman insolvency using a novel dataset of all … segment become sensitive to counterparty characteristics and banks start hoarding liquidity by shortening the maturity of … their interbank lending. This aggregate change in liquidity reallocation is accompanied by a substantial structural change …

demand for liquidity in the interbank market as wells as banks' access to this market. Results indicate that riskier banks … pay higher prices and borrow less liquidity, concurrent with the existence of market discipline. More capitalized and … higher prices and hoard liquidity when liquidity positions across them are more imbalanced and during a monetary policy …

We examine the system-wide effects of liquidity regulation on banks’ balance sheets. In the general equilibrium model … value before maturity, e.g., structured securities. By improving the liquidity of interbank markets, tighter liquidity … requirements induce banks to invest in such complex assets. We evaluate the welfare properties of combining liquidity regulation …