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Xavier Vives

Professor Emeritus of Economics · IESE Business School

Professor Emeritus of Economics and Financial Management at IESE Business School. His interests include dynamic games of complementarities, innovation and competition, banking crisis and regulation, information and financial markets, and competition policy.

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Published American Economic Review Published Jul 2026

Market Opacity and Fragility: Why Liquidity Evaporates When It Is Most Needed

Giovanni Cespa · Xavier Vives

The paper asks why market liquidity sometimes behaves in a stabilizing way (an illiquidity hike curbs liquidity demand and attracts liquidity supply) but on other occasions "evaporates when it is most …

Financial Markets Banking Credit Methodology