The term-structure of investment and the banks' insurance function
AbstractThe article re-examines the proposition, first formulated by Bryant (1980) and Diamond and Dybcvig ( 1983), that in a production economy with stochastic liquidity shocks to the household sector, banks serve to provide optimal intertemporal insurance to consumers. The paper argues that in order to understand the moral hazard problems inherent in this insurance problem, it is too narrow to consider solely the role of banks as providers of liquidity. The paper develops a model with several investment opportunities in which banks have the additional function of asset diversification.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Elsevier in its journal European Economic Review.
Volume (Year): 41 (1997)
Issue (Month): 7 (July)
Contact details of provider:
Web page: http://www.elsevier.com/locate/eer
Other versions of this item:
- Ernst-Ludwig VON THADDEN, 1996. "The Term-Structure of Investment and the Banks' Insurance Function," Cahiers de Recherches Economiques du DÃ©partement d'EconomÃ©trie et d'Economie politique (DEEP) 9606, Université de Lausanne, Faculté des HEC, DEEP.
- D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
- D92 - Microeconomics - - Intertemporal Choice and Growth - - - Intertemporal Firm Choice and Growth, Financing, Investment, and Capacity
- G20 - Financial Economics - - Financial Institutions and Services - - - General
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Matias Fontenla, 2004. "Banks and Capital Inflows," Econometric Society 2004 Latin American Meetings 272, Econometric Society.
- Falko Fecht & Antoine Martin, 2005.
"Banks, Markets, and Efficiency,"
- Falko Fecht & Antoine Martin, 2005. "Banks, markets, and efficiency," Staff Reports 210, Federal Reserve Bank of New York.
- Fecht, Falko & Martin, Antoine, 2005. "Banks, markets, and efficiency," Discussion Paper Series 2: Banking and Financial Studies 2005,04, Deutsche Bundesbank, Research Centre.
- Alexander Zimper, 2013.
"Optimal Liquidity Provision Through a Demand Deposit Scheme: The Jacklin Critique Revisited,"
German Economic Review,
Verein für Socialpolitik, vol. 14(1), pages 89-107, 02.
- Alexander Zimper, 2011. "Optimal liquidity provision through a demand deposit scheme: The Jacklin critique revisited," Working Papers 208, Economic Research Southern Africa.
- von Thadden, Ernst-Ludwig, 1999.
"Liquidity creation through banks and markets: Multiple insurance and limited market access,"
European Economic Review,
Elsevier, vol. 43(4-6), pages 991-1006, April.
- Ernst-Ludwig VON THADDEN, 1998. "Liquidity Creation through Banks and Markets : Multiple Insurance and Limited Market Access," Cahiers de Recherches Economiques du DÃ©partement d'EconomÃ©trie et d'Economie politique (DEEP) 9820, Université de Lausanne, Faculté des HEC, DEEP.
- Gersbachd, Hans, 1998. "Liquidity Creation, Efficiency, and Free Banking," Journal of Financial Intermediation, Elsevier, vol. 7(1), pages 91-118, January.
- Jochen Güntner, 2013. "The federal funds market, excess reserves, and unconventional monetary policy," Economics working papers 2013-12, Department of Economics, Johannes Kepler University Linz, Austria.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wendy Shamier).
If references are entirely missing, you can add them using this form.