The DOI matches its Crossref record; 18 of the 18 references it cites were found in a registry or an index.
The Paradox of Liquidity
Open accessAbstract
The more liquid a firm's assets, the greater their value in a short-notice liquidation. It is generally thought that a firm should find it easier to raise external finance against more liquid assets. This paper focuses on the dark side of liquidity: greater asset liquidity reduces the firm's ability to commit to a specific course of action. As a result, greater asset liquidity can, in some circumstances, reduce the firm's capacity to raise external finance. Firms with “excessively” liquid assets are in the best position to finance illiquid projects. This leads us to a theory of financial intermediation and disintermediation based on the liquidity of assets.
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Cites
Theory of the firm: Managerial behavior, agency costs and ownership structure
Jensen, M. C., & Meckling, W. H. (1976) · Journal of Financial Economics · doi:10.1016/0304-405x(76)90026-x · Cited by 71,491
Determinants of corporate borrowing
Myers, S. C. (1977) · Journal of Financial Economics · doi:10.1016/0304-405x(77)90015-0 · Cited by 13,169
Self-citationBank Runs, Deposit Insurance, and Liquidity
Diamond, D. W., & Dybvig, P. H. (1983) · Journal of Political Economy · doi:10.1086/261155 · Cited by 9,369
Financial intermediation and delegated monitoring
Diamond, D. W. (1984) · The Review of Economic Studies · doi:10.2307/2297430 · Cited by 8,476
Liquidation Values and Debt Capacity: A Market Equilibrium Approach
SHLEIFER, A., & VISHNY, R. W. (1992) · The Journal of Finance · doi:10.1111/j.1540-6261.1992.tb04661.x · Cited by 2,893
Shleifer, A., & Vishny, R. W. (1989) · Journal of Financial Economics · doi:10.1016/0304-405x(89)90099-8 · Cited by 2,151
Debt Maturity Structure and Liquidity Risk
Diamond, D. W. (1991) · The Quarterly Journal of Economics · doi:10.2307/2937924 · Cited by 1,801
Financial Intermediary-Coalitions
Boyd, J. H., & Prescott, E. C. (1985) · doi:10.21034/sr.87 · Cited by 1,440
A Theory of Debt Based on the Inalienability of Human Capital
Hart, O., & Moore, J. (1994) · The Quarterly Journal of Economics · doi:10.2307/2118350 · Cited by 1,438
Information Reliability and a Theory of Financial Intermediation
Ramakrishnan, R. T. S., & Thakor, A. V. (1984) · The Review of Economic Studies · doi:10.2307/2297431 · Cited by 1,160
Cited by
The Determinants of Corporate Liquidity: Theory and Evidence
Kim, C.-S., Mauer, D. C., & Sherman, A. E. (1998) · The Journal of Financial and Quantitative Analysis · doi:10.2307/2331099 · Cited by 1,244
Covenants and collateral as incentives to monitor
RAJAN, R., & WINTON, A. (1995) · The Journal of Finance · doi:10.1111/j.1540-6261.1995.tb04052.x · Cited by 1,193
Self-citationHas Finance Made the World Riskier?
Rajan, R. G. (2006) · European Financial Management · doi:10.1111/j.1468-036x.2006.00330.x · Cited by 913
Self-citationIs cash negative debt? A hedging perspective on corporate financial policies
Acharya, V. V., Almeida, H., & Campello, M. (2007) · Journal of Financial Intermediation · doi:10.1016/j.jfi.2007.04.001 · Cited by 893
International Evidence on Cash Holdings and Expected Managerial Agency Problems
Kalcheva, I., & Lins, K. V. (2007) · Review of Financial Studies · doi:10.1093/rfs/hhm023 · Cited by 820
Metadata
- Authors
- Myers, S. C., & Rajan, R. G.
- Venue
- The Quarterly Journal of Economics
- Publisher
- Oxford University Press (OUP)
- Published
- 1998-08-01
- Volume
- 113
- Issue
- 3
- Pages
- 733-771
- ISSN
- 0033-5533 (ISSN-L)
- 1531-4650
- OpenAlex
- W2889590150
- Cited by
- 959
- References
- 18
- FWCI
- 27.57
- Type
- journal article
- Language
- en
- Open access
- green
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- Myers, S. C., & Rajan, R. G. (1998). The Paradox of Liquidity. The Quarterly Journal of Economics. https://doi.org/10.1162/003355398555739
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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.
