Liquidity and Financial Crisis

Here comes a long-awaited economics book on liquidity, which has great importance especially after having financial crisis.

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.

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