The objective of this paper is to examine the impact of concurrent capital and liquidity constraints. The financial crisis of 2008 prompted Basel III, which addresses both capital and liquidity requirements of banks. In an effort to understand the policy efficacy of Basel III, it is important...

In a product market with uncertain demand, we examine a distribution channel consisting of one manufacturer and one capital-constrained retailer. The retailer may fund its business by borrowing credit either from a competitive bank market or from the manufacturer, provided it is also to the...