{"status":"ok","message-type":"work","message-version":"1.0.0","message":{"indexed":{"date-parts":[[2026,10,24]],"date-time":"2026-10-24T12:40:52Z","timestamp":1792845652194,"version":"4.5.0"},"posted":{"date-parts":[[2026]]},"group-title":"SSRN","reference-count":0,"publisher":"Elsevier BV","license":[{"start":{"date-parts":[[2026,1,1]],"date-time":"2026-01-01T00:00:00Z","timestamp":1767225600000},"content-version":"unspecified","delay-in-days":0,"URL":"https:\/\/creativecommons.org\/licenses\/by\/4.0\/"}],"content-domain":{"domain":[],"crossmark-restriction":false},"short-container-title":[],"abstract":"<jats:p>This paper studies how a moderate change in the policy rate can produce a disproportionately large, and potentially discontinuous, response in a risky-asset price when the marginal absorber of the asset is a leveraged financial intermediary. The model is a temporary-equilibrium economy with CARA-normal households, risk-neutral intermediaries that face a haircut-based collateral constraint and carry floating-rate liabilities, and one risky asset. The policy rate acts through the households' required return, the intermediaries' funding cost and the marked-to-market value of the intermediaries' collateral. Because net worth depends on the price, liquidity capacity is endogenous, and market clearing reduces to a concave quadratic in the price. This permits closed-form results. An equilibrium always exists. If the inherited balance sheet is sufficiently levered, the equilibrium is unique at low policy rates, there are three equilibria on an interval of rates, and a single \"insolvency\" equilibrium remains above a critical rate. The critical rate is a saddle-node bifurcation, the lower boundary of the interval is a border collision, and the monetary multiplier equals one plus the balance-sheet gain divided by the square root of the discriminant, which diverges at the fold. I derive the Jacobian of an associated price and net-worth adjustment system, show that the only possible loss of local stability is of fold or flip type, and sign the comparative statics of the thresholds. A hysteresis band follows under a persistence selection rule. Numerical values are illustrative and not estimated. The model has no forward-looking dynamics and no endogenous leverage choice.<\/jats:p>","DOI":"10.2139\/ssrn.7663382","type":"posted-content","created":{"date-parts":[[2026,10,24]],"date-time":"2026-10-24T12:08:45Z","timestamp":1792843725000},"source":"Crossref","is-referenced-by-count":0,"title":["Endogenous Liquidity Capacity And Nonlinear Monetary Transmission A Theoretical Framework For Macro-Financial Instability"],"prefix":"10.2139","author":[{"given":"Adam","family":"Adwan","sequence":"first","affiliation":[],"role":[{"vocabulary":"crossref","role":"author"}]}],"member":"78","container-title":[],"original-title":[],"deposited":{"date-parts":[[2026,10,24]],"date-time":"2026-10-24T12:08:45Z","timestamp":1792843725000},"score":1,"resource":{"primary":{"URL":"https:\/\/www.ssrn.com\/abstract=7663382"}},"subtitle":[],"short-title":[],"issued":{"date-parts":[[2026]]},"references-count":0,"URL":"https:\/\/doi.org\/10.2139\/ssrn.7663382","relation":{},"subject":[],"published":{"date-parts":[[2026]]},"subtype":"preprint"}}