banks to have private information about the risk of their assets. We show how banks' asset risk affects funding liquidity in … state with adverse selection and elevated rates; and iii) market breakdown with liquidity hoarding. We provide an … of unsecured rates and excess reserves banks hold, as well as the inability of massive liquidity injections by central …

leveraged banks’ precautionary demand for liquidity. When adverse asset shocks materialize, a bank’s ability to roll over debt … is impaired because of agency problems associated with high leverage. In turn, a bank’s propensity to hoard liquidity is …

We study liquidity transfers between banks through the interbank borrowing and asset sale markets when (i) surplus … banks providing liquidity have market power, (ii) there are frictions in the lending market due to moral hazard, and (iii …) compared to outside markets, or is prepared to extend loss- making loans. The public provision of liquidity to banks, in fact …

capital requirement and chooses the liquidity buffer that it wants to hold and the risk of its loan portfolio. The equilibrium …. Moreover, when the LLR does not charge penalty rates, the bank chooses the same level of risk and a smaller liquidity buffer …

to liquidity assistance as a solution to forbearance. Faced with a bank that chooses capital and liquidity, the … institution providing liquidity assistance can commit to a mixed strategy: never bailing out is too costly and therefore not … credible, while always bailing out causes moral hazard. In equilibrium, the bank chooses above minimum capital and liquidity …

During the recent financial crisis, central banks have provided liquidity and governments have set up rescue programmes … bank suffering from liquidity shocks, we find that the unregulated bank keeps too much liquidity and monitors too little. A … central bank can alleviate the liquidity problem, but induces moral hazard. Therefore, we introduce an additional authority …

banks have provided liquidity and ministries of finance have set up rescue programmes to restore confidence and stability …. Using a model of a systemic bank suffering from liquidity shocks, we find that the unregulated bank keeps too much liquidity … and takes excessive risk compared to the social optimum. A Lender of Last Resort can alleviate the liquidity problem, but …

We model systemic risk in an interbank market. Banks face liquidity needs as consumers are uncertain about where they … need to consume. Interbank credit lines allow banks to cope with these liquidity shocks while reducing the cost of …