Why are Banks’ Holdings of Liquid Assets So High?

We are grateful for excellent research assistance from Jonas Elenskis, Byungwook Kim, and Leandro Sanz. We thank Mike Wittry for useful discussions. We are grateful to Viral Acharya, Allen Berger, Mark Carey, Darrell Duffie, Gene Fama, Mark Flannery, Steven Ongena, Raluca Roman, Til Schuermann, Jeremy Stein, and participants at the Virtual Corporate Finance seminar, the 2023 Financial Intermediation Research Society conference, and seminars at De Nederlandsche Bank, Erasmus University Rotterdam, Ohio State University, Tilburg University, University of Amsterdam, University of Chicago, University of Texas at San Antonio, and University of Zurich for comments. Stulz is at times retained by financial institutions or their attorneys as a consultant or as an expert. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.

• August 3, 2022
• May 5, 2023