analyze a model federal funds market where uncertain liquidity flows transaction costs induce banks to delay trading bid up …

stabilizing their own liquidity at high frequency. The latter institution follows a much more "hands-on" approach involving daily … intervention to fine-tune the liquidity of the banking system. We review the implications of these contrasting approaches, focusing … from their customary style of liquidity management. We find that, despite differences in operational framework, certain …

Banks hold liquid and illiquid assets. An illiquid bank that receives a liquidity shock sells assets to liquid banks in … the market equilibrium is constrained inefficient, with too little liquidity and inefficient hoarding. Our model features … a precautionary as well as a speculative motive for hoarding liquidity, but the inefficiency of liquidity provision can …

liquidity. Asset shocks impair a bank’s ability to roll over debt because of agency problems associated with high leverage. In … turn, banks hoard liquidity and decrease term lending as their rollover risk increases over the term of the loan. High …

In August of 2007, banks faced a freeze in funding liquidity from the asset-backed commercial paper (ABCP) market. We … investigate how banks scrambled for liquidity in response to this freeze and its implications for corporate borrowing. Commercial …

market: Some banks rely on spot transactions, while most form stable, concentrated borrowing relationships to hedge liquidity … liquidity supply (days with low GSE lending) lead to marketwide drops in liquidity and a rise in interest rates. However …, borrowers with concentrated lenders are almost completely insulated from the shocks, while liquidity transmission affects the …

A major lesson of the recent financial crisis is that the ability of banks to withstand liquidity shocks and to provide …

particular, we do not find that worse performing banks began hoarding liquidity and indiscriminately reducing their lending. …