Bank of England Special: Bank liq...
Bank of England Special: Bank liquidity and the cost of debt

Faculti by Faculti

Episode notes

Since the 2007–09 crisis, tougher bank liquidity regulation has been imposed which aims to ensure banks can survive a severe funding stress. Critics of this regulation suggest that it raises the cost of maturity transformation and reduces productive lending. Rhiannon Sowerbutts discusses a bank run model with a unique equilibrium where solvent banks can fail due to illiquidity.