Uncertainty, Liquidity Hoarding, and Financial Crises

by Sabrina I. Pacifici on May 6, 2013

Tanju Yorulmazer: “One of the most interesting phenomena marking the recent financial crisis was the disruptions in the interbank market, where banks borrow and lend reserves to each other. This post draws upon my paper with Douglas Gale, Liquidity Hoarding, to discuss this practice by banks during times of increased uncertainty about future liquidity needs and its consequences for the efficient transfer of liquidity in the interbank market.”

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