FECHT, FALKO; HUANG, KEVIN X. D.; MARTIN, ANTOINE - In: Journal of Money, Credit and Banking 40 (2008) 4, pp. 701-720
We build a model in which financial intermediaries provide insurance to households against idiosyncratic liquidity shocks. Households can invest in financial markets directly if they pay a cost. In equilibrium, the ability of intermediaries to share risk is constrained by the market. From a...