I'm working on my bachelor thesis right now and about 95% of the literature I have is in english. While I understand pretty much all of it, yesterday I stumbled on something that I just couldn't figure out and I thought some of you native speakers could probably help me out.
In other words, for a variety of reasons, the financial system is seen as initially vulnerable; suddenly, a shock occurs, which is then amplified by the endogenous response of market participants. There is no role for the factors underlying the build-up of the vulnerability in the first place. Finally, in many models, structurally illiquid portfolios are the key source of vulnerability and amplification. Liquid liabilities, and the threat of deposit runs, play a key role.
What exactly does he mean with the seconds (red) sentence? As I understand it he says that there are no factors which contribute to the vulnerability. So the system can't be made more or less vulnerable. It just is.
But then in the third (green) sentence he says that structurally illiquid portfolios are the source of the vulnerability. So more illiquid portfolios would surely make the system more vulnerable, which condradicts the second sentence, doesn't it?
Is my interpretation right, or did I misunderstand the second sentence?