Development: Liquid assets

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Financial regulation and australian Dollar Liquid assets

Liquid assets play an important role in the financial system. They are generally defined as financial assets, such as cash and government securities, that can be readily used to fund payments, even in stressed market conditions. These assets are central to liquidity and credit risk management in financial markets. They are commonly used as collateral to obtain short-term funding and manage coun...

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Liquid Assets in Banks: Theory and Practice

This paper summarizes theoretical ndings on the determinants of liquid assets held by banks. The ndings are summarized in a series of predictions, some of which are tested using a panel data set on Mexican banks. Surprisingly, we nd that banks with relatively more demand deposits have relatively less liquid assets, in contrast with the theoretical prediction. We further exploit a period charact...

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The demand of liquid assets with uncertain lumpy expenditures

We consider an inventory model for a liquid asset where the per-period net expenditures have two components: one that is frequent and small and another that is infrequent and large. We give a theoretical characterization of the optimal management of liquid asset as well as of the implied observable statistics. We use our characterization to interpret some aspects of households' currency managem...

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Risk and Corporate Holdings of Highly Liquid Assets

* Both authors are affiliated with the Department of Finance, Hong Kong University of Science and Technology, Clear Water Bay, Kowloon, Hong Kong. The second author is also affiliated with the University of British Columbia. We would like to thank K. C. Chan, Sudipto Dasgupta, Vojislav Maksimovic, Anjan Thakor, Sheridan Titman, and the seminar participants at the Hong Kong University of Science...

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Could making banks hold only liquid assets induce bank runs?

Restrictions placed on bank portfolios are analyzed in a banking model designed to capture the role of checking accounts in facilitating transactions. Forcing banks to hold only liquid assets creates the incentive for liquidity-based runs. Even when a run does not occur, welfare is reduced as a result of overinvestment in the liquid asset. & 2010 Elsevier B.V. All rights reserved.

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ژورنال

عنوان ژورنال: Nature

سال: 2014

ISSN: 0028-0836,1476-4687

DOI: 10.1038/505288a