Banks' Liquidity Risk Exposes Winners and Losers in Financial Crises
The article examines how different banks handle liquidity risk during financial crises. By analyzing data, the researchers found that banks vary in their exposure to liquidity risk. Larger banks with more capital are less affected by changes in overall liquidity. However, banks relying heavily on deposits or wholesale funding are more vulnerable to liquidity risk. This suggests that stricter liquidity requirements should be imposed on all banks to prevent financial instability.