This paper introduces a theoretical liquidity risk model to explain how the fire-sale price happens by banks' portfolio … composition and the liquidity shocks. The model illustrates that the derivatives can serves as Arrow-Debreu securities for banks … to share and eliminate the liquidity risks. The shadow banking system serves as the external funds aids banks to absorb …

This paper applies Tian's liquidity risk model to analysis the liquidity shocks to the banking industry during the … Great Depression. The weekly change of banks' balance sheet shows banks' liquidity preference was changed significantly … during 1920s. Call-loans, functioned as today's shadow banking system, created liquidity among banks and provided external …

stock market crashes, bank fails and other setbacks that endanger the yield of illiquid savings. In turbulent times, the … insurance motive to save money increases total savings by replacing deposit saving more than one-to-one. The share of deposit … savings depends positively on the expected interest rate, while the share of cash savings is the higher the less there is …

) system. A pure RTGS system typically requires participants to hold large amounts of intraday liquidity in order to settle … their payment obligations. Implementing one or more liquidity-saving mechanisms (LSMs) can reduce the amount of liquidity … participants need to hold. This paper investigates how much liquidity requirements can be reduced with the implementation of …

A surge in banks' liquidity needs increases settlement costs that could burden the functioning of the real economy … through its impact on banks' lending behavior. A liquidity-saving mechanism (LSM) can help reduce banks' liquidity needs, but … trading off the cost of delaying payments against the cost of borrowing liquidity. An LSM provides a partial offsetting …