Liquidity Hoarding in Financial Networks: The Role of Structural Uncertainty

Figure 1

Ratio of bank liquid reserves to bank assets in the United States (1960–2016), that is, the ratio of domestic currency holdings and deposits with the monetary authorities to claims on other governments, nonfinancial public enterprises, the private sector, and other banking institutions. The recent 2007–2008 financial crisis led banks to hoard liquidity. Source: the World Bank, retrieved from http://WorldBank.com and http://NationMaster.com.