Capital Requirements and Rational Discount-Window Borrowing
AbstractWhen banks face capital regulations and stochastic deposit supply, their decisions to borrow at the discount window will be affected by a broader range of variables than previous theoretical and empirical studies have recognized. Moreover, those decisions can respond discontinuously to changes in market parameters and to the form of rationing rule by which the discount window is administered. Risk aversion can complicate these linkages considerably, even causing some banks to prefer a positive discount rate that may exceed the actual level.
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Bibliographic InfoArticle provided by Blackwell Publishing in its journal Journal of Money, Credit and Banking.
Volume (Year): 30 (1998)
Issue (Month): 4 (November)
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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0022-2879
Other versions of this item:
- Sherrill Shaffer, 1996. "Capital requirements and rational discount window borrowing," Working Papers 96-4, Federal Reserve Bank of Philadelphia.
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