search query: @author Rajan, R. G. / total: 7
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| Author: | Diamond, D. W. Rajan, R. G. |
| Title: | Liquidity risk, liquidity creation, and financial fragility: a theory of banking |
| Journal: | Journal of Political Economy
2001 : APR, VOL. 109:2, p. 287-327 |
| Index terms: | BANKING LIQUIDITY LOANS |
| Language: | eng |
| Abstract: | Loans are illiquid when a lender needs relationship-specific skills to collect them. Consequently, if the relationship lender needs funds before the loan matures, she may demand to liquidate early, or require a return premium, when she lends directly. Borrowers also risk losing funding. The costs of illiquidity are avoided if the relationship lender is a bank with a fragile capital structure, subject to runs. |
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