Traditionally, aggregate liquidity shocks are modeled as exogenous
events. This paper analyzes the adequate policy response to
endogenous exposure to systemic liquidity risk. We analyze the
feedback between lender-of-last-resort policy and incentives of
private banks, determining the aggregate amount of liquidity
available. We show that imposing minimum liquidity standards for
banks ex ante is a crucial requirement for sensible
lender-of-last-resort policy. In addition, we analyze the impact of
equity requirements and narrow banking, in the sense that banks are
required to hold sufficient liquid funds so as to pay out in all
contingencies. We show that both policies are strictly inferior to
imposing minimum liquidity standards ex ante combined with
lender-of-last-resort policy.
General
| Imprint: |
Bibliogov
|
| Country of origin: |
United States |
| Release date: |
September 2012 |
| First published: |
September 2012 |
| Authors: |
Jin Cao
|
| Dimensions: |
246 x 189 x 3mm (L x W x T) |
| Format: |
Paperback - Trade
|
| Pages: |
48 |
| ISBN-13: |
978-1-249-45510-3 |
| Categories: |
Books >
Social sciences >
Politics & government >
General
Promotions
|
| LSN: |
1-249-45510-3 |
| Barcode: |
9781249455103 |
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