We propose an origination-and-contingent-distribution model of banking, in which liquidity demand by short-term investors (banks) can be met with cash reserves (inside liquidity) or sales of assets (outside liquidity) to long-term investors (hedge funds and pension funds). Outside liquidity is a...

Originators produce higher quality assets at a private cost. These assets can either be bought by informed intermediaries or sold in a pool with low quality assets. Savings gluts diminish origination incentives because they compress the spread between the price paid for high quality assets and...

We study asset and debt characteristics of US banks. We show that financial institutions, especially large institutions, are not just about holding assets that can be directly pledged and "pawned." Services and going-concern values are important, and capital market debt against going-concern...