This paper introduces agent heterogeneity, liquidity, and endogenous default to a DSGE framework. Our model allows for … the economy. Due to liquidity and endogenous default, the transmission mechanism of shocks is well defined, and their …

during and after the crisis. -- interbank networks ; credit crisis ; liquidity freeze … the entire interbank network. The rate of system-wide bank failure is rendered endogenous, depending crucially on both the … a sharp transition from a dense network of credit relations to a sparse network where credit freezes readily occur are …

Using a unique data base of Global Credit Data with individual loan information from small and medium sized entities in …

decrease a bank's incentive to take risk with its remaining ineligible assets. A greater capacity to respond to liquidity … illiquidity disadvantages of holding risky assets. We then empirically estimate the effect of two liquidity regulations on bank … stress increases the potential profits a bank would put at stake by making risky investments, but it also mitigates the …

This paper examines the impact of banks' lending incentives on asset prices and bank cash holdings under liquidity risk … from bank loans). This paper shows fire sales of assets can be an endogenous outcome, even if banks are endowed with enough … cash to meet liquidity shocks. This paper also helps explain why banks have kept a large amount of cash without lending …

Business cycles imply liquidity risks for banks. This paper explores how these risks influence bank lending over the … cycle. With forward-looking banks, lending cycles, credit booms and busts, or suppressed and highly fragile bank systems can … emerge, depending on the magnitude of liquidity risks. In this context, regulatory stability-enhancing measures have some …

Bank regulators and academics have long conjectured the beneficial effects of smoothing in loan loss provisions (i ….e., making higher provisions during good times so as to avoid doing so during bad times) for bank lending and stability, while … emerging market crisis to capture an adverse supply shock to bank capital, we show, consistent with the bright-side, that …