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Inside and Outside Liquidity
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Inside and Outside Liquidity

Bengt Holmstrom and Jean Tirole

Abstract

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? These questions are at the center of all financial crises, including the current global one. This book offers an original, unified perspective on these questions. In a slight, but significant, departure from the standard theory of finance, it shows how imperfect pledgeability of corpo ... More

Keywords: financial institutions, industrial companies, households, money balances, Treasury bills, liquid assets, international financial markets, financial crises, finance

Bibliographic Information

Print publication date: 2011 Print ISBN-13: 9780262015783
Published to MIT Press Scholarship Online: August 2013 DOI:10.7551/mitpress/9780262015783.001.0001

Authors

Affiliations are at time of print publication.

Bengt Holmstrom, author

Jean Tirole, author