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dc.contributor.authorWagner, Wolf
dc.date.accessioned2010-05-20T11:31:25Z
dc.date.available2010-05-20T11:31:25Z
dc.date.issued2005
dc.identifier.citationJEL classifications: G21, G28en
dc.identifier.urihttp://www.dspace.cam.ac.uk/handle/1810/225171
dc.description.abstractThis paper develops a model of banking fragility driven by aggregate liquidity shortages. Inefficiencies arise because liquidity smoothing across banks breaks down when there is such a shortage, causing unnecessary and value-reducing transfer of assets between banks. We find that a Lender of Last Resort policy is ineffective in restoring efficiency as it leads to offsetting changes in the banks’ supply of liquidity. In contrast, subsidizing the purchase of assets from troubled banks increases welfare by improving the banks’ liquidity holdings. The first best, however, is achieved by redistributing liquidity from healthy to troubled banks in a crisis.en
dc.language.isoenen
dc.publisherCFAP, Cambridge Judge Business School, University of Cambridgeen
dc.relation.ispartofseriesCFAP Working Paperen
dc.relation.ispartofseries21en
dc.rightsAll Rights Reserveden
dc.rights.urihttps://www.rioxx.net/licenses/all-rights-reserved/en
dc.subjectbanking crisesen
dc.subjectliquidity shortagesen
dc.subjectregulationen
dc.titleAggregate liquidity shortages, idiosyncracic liquidity smoothing and banking regulationen
dc.typeWorking Paperen
dc.type.versionpublished versionen


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