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Cited by 2,002

The DOI matches its Crossref record; 3 of the 3 references it cites were found in a registry or an index.

Liquidity Risk, Liquidity Creation, and Financial Fragility: A Theory of Banking

Open access
Diamond, Douglas W., Rajan, Raghuram G.·2001·Journal of Political Economy
DOI 10.1086/319552
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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. Fragility commits banks to creating liquidity, enabling depositors to withdraw when needed, while buffering borrowers from depositors' liquidity needs. Stabilization policies, such as capital requirements, narrow banking, and suspension of convertibility, may reduce liquidity creation.

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Crossref · 10.1086/319552

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Metadata

Authors
Diamond, D. W., & Rajan, R. G.
Venue
Journal of Political Economy
Publisher
University of Chicago Press
Published
2001-04
Volume
109
Issue
2
Pages
287-327
ISSN
  • 0022-3808 (ISSN-L)
  • 1537-534X
DOI
10.1086/319552
OpenAlex
W3124914565
Cited by
2,002
References
3
FWCI
66.82
Type
journal article
Language
en
Open access
green

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CoChat. (2026). Citation check: Liquidity Risk, Liquidity Creation, and Financial Fragility: A Theory of Banking. https://app.cochat.ai/papers/10.1086/319552
The paper
Diamond, D. W., & Rajan, R. G. (2001). Liquidity Risk, Liquidity Creation, and Financial Fragility: A Theory of Banking. Journal of Political Economy. https://doi.org/10.1086/319552

Data sources

Bibliographic data: Semantic Scholar, OpenAlex, Crossref.

Contains information from the Semantic Scholar Academic Graph Datasets, made available under the ODC Attribution License (ODC-BY 1.0).

Semantic Scholar’s data is described in: Kinney, R., et al. (2023). The Semantic Scholar Open Data Platform. arXiv:2301.10140.