#2672. High liquidity creation and bank failures

January 2027publication date
Proposal available till 30-05-2025
4 total number of authors per manuscript4500 $

The title of the journal is available only for the authors who have already paid for
Journal’s subject area:
Economics, Econometrics and Finance (all);
Finance;
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Abstract:
The article analyzes the “High Liquidity Creation Hypothesis” (HLCH), according to which the proliferation of core banking liquidity creation activities increases the likelihood of rejection. The results show that the creation of high liquidity is associated with a higher likelihood of bank failure, and this finding withstands multiple reliability tests. The results also demonstrate that regulators can mitigate systemic disasters and reduce costs to society as a result of bank failures through early identification of the creators of high liquidity.
Keywords:
Bank failures; Liquidity creation

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