This paper develops the building blocks for a legal theory of finance. LTF holds that financial markets are legally …

returned to near normal levels of volatility and liquidity, suggesting that traders felt confident that the US would remain … neutral. Trading volumes increased after the closure, due to renewed confidence in the liquidity of US financial markets and …

interconnected market players, which raised the risk of domino defaults; (2) the lack of containment safeguards during times of … scheme.In response, policymakers developed and implemented a new regulatory framework intended to reduce risk-taking behavior … and better contain systemic risk. This framework mandated the use of clearinghouses for all standardized derivatives as …

How does asset encumbrance affect the fragility of intermediaries subject to rollover risk? We offer a model in which a …. Encumbering assets allows a bank to raise cheap secured debt and expand profitable investment, but it also concentrates risk on … guarantees induce excessive encumbrance and fragility. To mitigate such risk shifting, we study prudential regulatory tools …

We investigate the consequences of banks' liquidity hoarding behavior for the stability of the financial system … role of liquidity hoarding in the 2007-2009 financial crisis, we incorporate banks' hoarding behavior in a standard … potential solvency contagion, a market shock leads to banks' liquidity hoarding that may generate problems of short-term funding …

and reserve requirements are analysed for their effect on the risk of severe downturns. We develop an agent … stringent liquidity regulations are best to dampen output fluctuations and prevent severe downturns. Under such regulations both …

stability to turbulence. This indicator is based on the combination of a wide range of market prices of risk, properly … indicator, we discuss the conditional behavior of a basket of liquid assets. When the risk aversion signal breaches certain … thresholds, risky assets dramatically correlate and their risk rewards deteriorate. Sharpe ratios decrease and drawdowns increase …

-down, stress-testing framework to quantify systemic risk. The key transmission mechanism is a two-way interaction between the … assets by secondary market investors. This hampers a troubled bank's recourse to liquidity and increases the incidence of …