Banks can deal with their liquidity risk by holding liquid assets (self-insurance), by participating in interbank … to show that undiversi fiable liquidity risk, i.e. the liquidity risk that banks are unable to coinsure on interbank … liquidity risk hold more capital. We posit that empirically banks that are more exposed to undiversifi able liquidity risk are …

We examine the relation between capital and liquidity creation. This issue is interesting because of the potential … impact on liquidity creation from tighter capital requirements such as those in Basel III. We perform Granger-causality tests … from 2000 to 2010. We observe a strong expansion in liquidity creation until the financial crisis that was mainly driven by …

Both investors and borrowers are concerned about liquidity. Investors desire liquidity because they are uncertain about … when they will want to eliminate their holding of a financial asset. Borrowers are concerned about liquidity because they … compensation for the illiquidity investors will be subject to. We argue that banks can resolve these liquidity problems that arise …

Bank capital, and a bank's liquidity position, are concepts that are central to understanding what banks do, the risks … that can absorb losses that could otherwise threaten a bank's solvency. Meanwhile, liquidity problems arise due to … prudential regulation of banks, which seeks to ensure that banks have sufficient capital and liquidity resources to properly …

We analyze how bank management sentiment affects liquidity hoarding. Our newly-created sentiment measure derives bank … liquidity beyond what is warranted by their own conditions and external circumstances faced. Our results also suggest that this …