ECONOMICS OF REGULATION: CREDIT RATIONING AND EXCESS LIQUIDITY

Abstract : In examining the global imbalance by the excess liquidity level, the argument is whether commercial banks want to hold excess reserves for the precautionary aim or expect to get better return through risky decision. By pictorial representations, risk preference in the Machina's triangle (1982, 1987) encapsulates motivation to hold excess liquidity. This paper introduces an endogenous liquidity model for the financial sector where the imbalance argument comes from credit rationing extended from outside liquidity (Holmstrom and Tirole, 2011). We also conduct a stylistic analysis of excess liquidity in Jordan and Lebanon from 1993 to 2015. As such, the proposed model exemplifies the combination of credit, liquidity and regulation.
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Contributeur : Hyejin Cho <>
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Dernière modification le : jeudi 8 novembre 2018 - 16:04:01
Document(s) archivé(s) le : mercredi 23 août 2017 - 14:34:28

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Hyejin Cho. ECONOMICS OF REGULATION: CREDIT RATIONING AND EXCESS LIQUIDITY. 2017 Royal Economic Society Annual Conference, Apr 2017, Bristol, United Kingdom. ⟨hal-01375423v2⟩

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