liquidity and solvency shocks. Extending the work by Cao & Illing (2009a, b), it is shown that systemic liquidity shortage … policies which intend to fix the ineciencies, and argues that the co-existence of illiquidity and insolvency problems adds … extra cost for banking regulation and makes some schemes that are optimal under pure illiquidity risks (such as liquidity …

The paper provides a baseline model for regulatory analysis of systemic liquidity shocks. We show that banks may have … allocation is inferior from the investor's point of view since some banks free-ride on the liquidity provision as a result of … combination of liquidity regulation ex ante and lender of last resort policy ex post is able to implement the outcome maximizing …

This paper discusses liquidity regulation when short-term funding enables credit growth but generates negative systemic … containing risk and preserving credit quality, while quantity-based fundingratios are distorsionary. Liquidity buffers are either … overconfidence), excess credit and liquidity risk are best controlled with net fundingratios. Taxes on short-term funding emerge …

regulatory liquidity requirements on bank behavior. A multi-stage decision situation allows for considering the interaction … between credit risk and liquidity risk of banks. This interaction is found to make a risk neutral bank behave as if it were … risk averse in an environment where there is no interbank market and liquidity regulation. Introducing a buoyant interbank …

Pierret (2015) presents empirical analysis of the solvency-liquidity nexus for the banking system, documenting that a …-causes higher solvency risk. These results point toward a tight interaction between solvency and liquidity risk over time. My …

This paper provides a baseline model for regulatory analysis of systemic liquidity shocks. We show that banks may have … allocation is inferior from the investor's point of view since some banks free ride on the liquidity provision due to their … combination of liquidity regulation ex ante and lender of last resort policy ex post can maximize investor payoff. In contrast …