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Cited by 874

The DOI matches its Crossref record; 23 of the 23 references it cites were found in a registry or an index.

Liquidity Shortages and Banking Crises

Open access
DIAMOND, DOUGLAS W., RAJAN, RAGHURAM G.·2005·The Journal of Finance
DOI 10.1111/j.1540-6261.2005.00741.x
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Abstract

We show in this article that bank failures can be contagious. Unlike earlier work where contagion stems from depositor panics or contractual links between banks, we argue that bank failures can shrink the common pool of liquidity, creating, or exacerbating aggregate liquidity shortages. This could lead to a contagion of failures and a total meltdown of the system. Given the costs of a meltdown, there is a possible role for government intervention. Unfortunately, liquidity and solvency problems interact and can cause each other, making it hard to determine the cause of a crisis. We propose a robust sequence of intervention.

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Cites

Show all 23 references

Research works printed but not linked: 10

  1. Bagehot W., 1873, Lombard Street
  2. 10.1016/S0022-0531(03)00227-8 · doi:10.1016/s0022-0531(03)00227-8
  3. Calomiris Charles W., 1991, Financial Markets and Financial Crises
  4. Diamond Douglas W., 2001, Should Japanese banks be recapitalized?, Monetary and Economic Studies, 19, 1
  5. 10.1257/000282802320188961 · doi:10.1257/000282802320188961
  6. 10.1016/1042-9573(92)90020-E · doi:10.1016/1042-9573(92)90020-e
  7. Friedman Milton, 1963, A Monetary History of the United States 1867–1960
  8. Friend Irwin, 1954, Individuals' Saving: Volume and Composition
  9. Jacoby Neil H., 1942, Term Lending to Business
  10. Thornton Henry, 1939, The Library of Economics … Section 1: Classics of Economic Thought

Cited by

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Metadata

Authors
DIAMOND, D. W., & RAJAN, R. G.
Venue
The Journal of Finance
Publisher
Wiley
Published
2005-03-02
Volume
60
Issue
2
Pages
615-647
ISSN
  • 0022-1082 (ISSN-L)
  • 1540-6261
DOI
10.1111/j.1540-6261.2005.00741.x
OpenAlex
W3022974258
Cited by
874
References
23
FWCI
24.04
Type
journal article
Language
en
Open access
green
Licence
onlinelibrary.wiley.com/termsAndConditions#vor (vor)

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CoChat. (2026). Citation check: Liquidity Shortages and Banking Crises. https://app.cochat.ai/papers/10.1111/j.1540-6261.2005.00741.x
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DIAMOND, D. W., & RAJAN, R. G. (2005). Liquidity Shortages and Banking Crises. The Journal of Finance. https://doi.org/10.1111/j.1540-6261.2005.00741.x

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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.