In Inside and Outside Liquidity, leading economists Bengt Holmstrom and Jean Tirole offer an original unified perspective on the following questions that are center of all financial crises:
- Why do financial institutions, industrial companies, and households hold low-yielding money balances, Treasury bills, and other liquid assets?
- When and to what extent can the state and international financial markets make up for a shortage of liquid assets, allowing agents to save and share risk more effectively?
The publisher's description says:
In a slight, but important departure from the standard of finance, the authors show how imperfect pledgeability of corporate income leads to a demand for as well as a shortage of liquidity with interesting implications for the pricing of assets, investment decisions, and liquidity management.
The book surely attracts those who are interested in liquidity and financial crisis.