We consider a model of liquidity demand arising from a possible maturity mismatch between asset revenues and … consumption. This liquidity demand can be met with either cash reserves (inside liquidity) or via asset sales for cash (outside … liquidity). The question we address is, what determines the mix of inside and outside liquidity in equilibrium? An important …

We propose an origination-and-contingent-distribution model of banking, in which liquidity demand by short …-term investors (banks) can be met with cash reserves (inside liquidity) or sales of assets (outside liquidity) to long-term investors … (hedge funds and pension funds). Outside liquidity is a more efficient source, but asymmetric information about asset quality …

This paper identifies a precautionary banking liquidity shock via a set of sign, zero and forecast variance … financial intermediation with credit and liquidity frictions. The precautionary liquidity shock is shown to work through two …