New study from JGSOM proposes framework to address sudden market liquidity collapses

Ateneo de Manila Assistant Professor Emmanuel Richard B Madarang of the John Gokongwei School of Management (JGSOM) presented his research paper “Mitigating Liquidity Black Holes: A Game-Theoretic and Macroprudential Approach” last 19 February 2026 during the BSP Research Academy Huddle hosted by the Bangko Sentral ng Pilipinas.

The presentation examined how financial markets can experience sudden collapses in liquidity—referred to in the literature as liquidity black holes. The paper proposes a rules-based macroprudential policy framework that enables regulators to identify early warning indicators of coordination stress in financial markets and activate stabilization measures when systemic thresholds are reached. Such measures may include targeted liquidity facilities, calibrated foreign exchange interventions, and temporary adjustments to procyclical risk-management constraints.

The study also highlights the broader development implications of financial market instability, particularly in emerging economies where exchange-rate volatility and liquidity disruptions can propagate into the real economy through higher production costs, investment uncertainty, and disruptions to trade.

The presentation was delivered during a research forum which convenes policymakers, regulators, and researchers to exchange ideas on monetary policy, financial stability, and macroprudential regulation. Among those present at the event were Eli M Remolona Jr, Governor of the Bangko Sentral ng Pilipinas (BSP) and former Professor of International Finance at the International Center for Monetary and Banking Studies in Geneva and former Chief Representative for Asia and the Pacific of the Bank for International Settlements; Lyn I Javier, Deputy Governor for Financial Supervision of the Bangko Sentral ng Pilipinas; and Benjamin E Diokno, member of the Monetary Board and former Governor of the BSP, who also previously served as Secretary of Finance of the Philippines and Professor of Economics and Public Finance at the University of the Philippines - Diliman.

The paper presentation underscores the John Gokongwei School of Management’s continued engagement with national economic institutions and its commitment to research that contributes to financial policy discussions and macroeconomic stability. Mr. Madarang is faculty member of JGSOM Finance and Accounting Department (FAA).