Bank Liquidity Creation and Financial Crises
- Allen Berger
- Christa Bouwman
Financial crises and bank liquidity creation are often connected. Liquidity creation fuels economic growth, but excess liquidity creation may lead to asset bubbles that can burst and propagate financial crises. Bank Liquidity Creation and Financial Crises delivers a consistent and logical presentation of liquidity creation, connecting regulatory measures with this novel benchmarking tool. Authors Allen Berger and Christa Bouwman examine ways to measure liquidity creation, how much liquidity banks create in different countries, differences among five financial crises that occurred over the past three decades and normal times, the effects of monetary policy (including interest rate policy, lender of last resort, and quantitative easing), the effects of capital, the effects of regulatory interventions, and the effects of bailouts. No advanced, specialized academic knowledge is needed to understand the concept of liquidity creation. Narrowing the gap between the "academic world," focused on theories, and the "practitioner world," dedicated to solving real-world problems, Bank Liquidity Creation and Financial Crises offers a new tool for evaluating a bankâs performance over time and comparing it to its peer group.
Upper-division undergraduates, graduate students, and professionals worldwide working in banking, financial intermediation, and regulation, especially in respect to financial crises