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Bank liquidity, interbank markets, and monetary policy

Freixas, Xavier; Martin, Antoine; Skeie, David - 2009

A major lesson of the recent financial crisis is that the interbank lending market is crucial for banks that face uncertainty regarding their liquidity needs. This paper examines the efficiency of the interbank lending market in allocating funds and the optimal policy of a central bank in...

Persistent link: https://www.econbiz.de/10003864510

Financial fragility, sovereign default risk and the limits to commercial bank bail-outs

Wijnbergen, Sweder van; Kwaak, Christiaan van der - 2013

We analyse the poisonous interaction between bank rescues, financial fragility and sovereign debt discounts. In our model balance sheet constrained financial intermediaries finance both capital expenditure of intermediate goods producers and government deficits. The financial intermediaries face...

Persistent link: https://www.econbiz.de/10010224776

Shadow banking and the limits of central bank liquidity support : how to achieve a better balance between global and official liquidity

Moe, Thorvald - 2012

meltdown. Bagehot's advice to 'lend freely at high rates against good collateral' has been stretched to the limit in order to … discussing the collateral polices related to central banks' lender-of-last-resort and market-maker-of-last-resort policies and … concept was central to Hyman P. Minsky's theory of financial instability, and suggest that his insights should be integrated …

Persistent link: https://www.econbiz.de/10009516740

Shadow Banking and the Limits of Central Bank Liquidity Support : How to Achieve a Better Balance between Global and Official Liquidity

Moe, Thorvald Grung - 2012

Persistent link: https://www.econbiz.de/10013108113

Unconventional monetary policy and funding liquidity risk

Avernas, Adrien d'; Vandeweyer, Quentin; Darracq … - 2020

This paper investigates the efficiency of various monetary policy instruments to stabilize asset prices in a liquidity crisis. We propose a macro-finance model featuring both traditional and shadow banks subject to funding risk. When banks are well capitalized, they have access to money markets...

Persistent link: https://www.econbiz.de/10012137673

Traditional and shadow banks

Chrétien, Edouard; Lyonnet, Victor - 2019

This paper documents how traditional and shadow banks interacted with one another during the 2007 financial crisis, when both assets and liabilities flew from shadow to traditional banks. To rationalize their behavior, we propose a simple model which demonstrates the symbiotic coexistence and...

Persistent link: https://www.econbiz.de/10012107660

Real effects of financial market integration : evidence from an ECB collateral framework change

Hüttl, Pia; Kaldorf, Matthias - 2022

This paper studies the effects of harmonizing collateral policy in a monetary union. In 2007, the European Central Bank … replaced national collateral lists with a single list specifying which assets euro area banks can pledge as collateral. Banks … harmonized collateral framework facilitates cross-border lending to borrowing-constrained firms and, thereby, increases financial …

Persistent link: https://www.econbiz.de/10013279271

Real effects of financial market integration : evidence from an ECB collateral framework change

Hüttl, Pia; Kaldorf, Matthias - 2022

Persistent link: https://www.econbiz.de/10013336407

Unintended Consequences of LOLR Facilities : The Case of Illiquid Leverage

Acharya, Viral V. - 2013

While the direct effect of lender-of-last-resort (LOLR) facilities is to forestall the default of financial firms that lose funding liquidity, an indirect effect is to allow these firms to minimize deleveraging sales of illiquid assets. This unintended consequence of LOLR facilities manifests...

Persistent link: https://www.econbiz.de/10013072305

Procyclical leverage and crisis probability in a macroeconomic model of bank runs

Ikeda, Daisuke; Matsumoto, Hidehiko - 2021

Persistent link: https://www.econbiz.de/10013461539