Why Liquidity Vanishes in a Crash: Margin and Loss Spirals
Brunnermeier and Pedersen’s model explains why liquidity can vanish suddenly: falling liquidity raises margins, and higher margins cut liquidity.
#margin-spiral
1 articles
1 articles
Brunnermeier and Pedersen’s model explains why liquidity can vanish suddenly: falling liquidity raises margins, and higher margins cut liquidity.