Liquidity risk and bank portfolio allocation

Raphaël Franck, Miriam Krausz*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

5 Scopus citations


The joint existence of a lender of last resort and of a stock market is usually considered the sign of a developed financial infrastructure. This paper analyzes whether a securities market may play a role similar to that of a lender of last resort by being of assistance to a bank, which faces possible liquidity shortages. We examine which of these two institutions best prevents a bank's liquidity shortages while allowing the optimal allocation of the bank's resources. Our results suggest that securities markets matter more for the liquidity of banks than a lender of last resort.

Original languageAmerican English
Pages (from-to)60-77
Number of pages18
JournalInternational Review of Economics and Finance
Issue number1
StatePublished - 2007
Externally publishedYes


  • Financial markets
  • Lender of last resort
  • Liquidity risk


Dive into the research topics of 'Liquidity risk and bank portfolio allocation'. Together they form a unique fingerprint.

Cite this