Nyborg, Kjell G.; Östberg, Per - In: Journal of Financial Economics 112 (2014) 1, pp. 30-52
We argue that there is a connection between the interbank market for liquidity and the broader financial markets, which … has its basis in demand for liquidity by banks. Tightness in the market for liquidity leads banks to engage in what we … term “liquidity pull-back,” which involves selling financial assets either by banks directly or by levered investors …