Liquidity shortages and capital ratios: how do banks react?

This thesis explores the critical relationship between liquidity and capital in the banking sector. In the first chapter, the analysis focuses on how banks manage liquidity, the importance of capital requirements, and the trade-off between liquidity and profitability. The second chapter investigates the concepts of liquidity shortage, contagion and systemic risk with a focus specifically on bank runs. The third chapter analyses responses to liquidity crises, starting with banks' internal strategies and moving to institutional responses. Then it follows an analysis of the role of central banks as lenders of last resort. The fourth chapter offers a description of the 2008 global financial crisis, exploring how the crisis unfolded, how banks responded, and its impact on capital ratios and overall financial stability.