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Excess Liquidity (excess + liquidity)

Distribution by Scientific Domains
Business, Economics, Finance and Accounting100%

Selected Abstracts

Interbank Lending, Liquidity and Banking Crises

ECONOMIC NOTES, Issue 3 2002
Paola Brighi
In this paper, we show that abandoning the Diamond and Dybvig hypothesis of a unique bank representing the entire banking system gives rise to the possibility of endogenizing the interbank exchanges. In a system characterized by uncertainty regarding the moment of withdrawal of deposits, access to interbank liquidity decreases the bank risk of failure and bank runs. The possibility, moreover, to invest excess liquidity in the interbank market at a positive interest rate increases expected bank profits. (J.E.L.: E52, G21). [source]

Does Global Liquidity Matter for Monetary Policy in the Euro Area?,

INTERNATIONAL FINANCE, Issue 1 2009
Helge Berger
Global excess liquidity prevalent across the world's financial markets (or its sudden absence) is sometimes believed to limit sovereign monetary policy even in large economies such as the euro area. However, there is still discussion about what constitutes global excess liquidity and how exactly it shapes the policy environment. Our approach adjusts liquidity for a longer-term interest rate and output effects and focuses on US and Japanese liquidity as relevant proxies for global developments from a euro area perspective. We find that, in particular, excess liquidity in the US tends to lead developments in euro area liquidity. US excess liquidity is also consistently positive as a determinant of euro area inflation and is shown to be Granger-causal for euro area inflation in an out-of-sample forecasting exercise. There is some evidence that, at least in part, this result seems to be related to a weakening of the effectiveness of monetary policy in the euro area interest during times of excessive US liquidity. In contrast, the influence of euro area excess liquidity on euro area inflation is more limited. [source]

FUNDING EXTERNALITIES, ASSET PRICES AND INVESTORS' ,SEARCH FOR YIELD'

BULLETIN OF ECONOMIC RESEARCH, Issue 1 2009
Prasanna Gai
G15; E44; E58 ABSTRACT This note presents a simple model that nests the ,excess liquidity' and ,savings glut' hypotheses of the debate on the recent asset price boom. It clarifies the notion of investors' ,search for yield' and shows how financial frictions influence asset price dynamics. [source]