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A Strategic Market Game with a Mutual Bank with Fractional Reserves and Redemption in Gold (A Continuum of Traders)

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Author Info
Martin Shubik () (Cowles Foundation, Yale University)
D.P. Tsomocos (Cowles Foundation, Yale University)

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Abstract

We utilize the strategic market game approach to analyze the role and function of a mutual bank with variable fractional reserves, redemption in gold and endogenous interest rate formation. We specify the conditions of enough money and its distribution. Using the continuum of traders model, we show existence and optimality for the case of no bankruptcy as well as for the case in which there exists the potentiality of bankruptcy. Finally, we analyze the relationship of the gearing ratio and the bankruptcy penalty with respect to the resulting equilibrium allocations.

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File URL: http://cowles.econ.yale.edu/P/cp/p08a/p0812.pdf
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File URL: http://cowles.econ.yale.edu/P/cd/d09b/d0964.pdf
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Publisher Info
Paper provided by Cowles Foundation, Yale University in its series Cowles Foundation Discussion Papers with number 964.

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Length: 24 pages
Date of creation: Dec 1990
Date of revision:
Publication status: Published in Journal of Economics (1992), 55(2): 123-150
Handle: RePEc:cwl:cwldpp:964

Note: CFP 812.
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Postal: Yale University, Box 208281, New Haven, CT 06520-8281 USA
Phone: (203) 432-3702
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Web page: http://cowles.econ.yale.edu/
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Postal: Cowles Foundation, Yale University, Box 208281, New Haven, CT 06520-8281 USA

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Related research
Keywords: Banking; interest rates; bankruptcy; credit; money supply;

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Find related papers by JEL classification:
G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Mortgages
E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Determination of Interest Rates; Term Structure of Interest Rates

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Martin Shubik, 1990. "The transactions trust demand for money," Journal of Economics, Springer, vol. 52(3), pages 211-232, October. [Downloadable!] (restricted)
  2. John Geanakoplos & Pradeep Dubey, 1989. "Liquidity and Bankruptcy with Incomplete Markets: Pure Exchange," Cowles Foundation Discussion Papers 900, Cowles Foundation, Yale University. [Downloadable!]
  3. Shubik, Martin & Yao, Shuntian, 1990. "The transactions cost of money (a strategic market game analysis)," Mathematical Social Sciences, Elsevier, vol. 20(2), pages 99-114, October. [Downloadable!] (restricted)
  4. Shubik, Martin, 1985. "A note on enough money in a strategic market game with complete or fewer markets," Economics Letters, Elsevier, vol. 19(3), pages 231-235. [Downloadable!] (restricted)
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  5. Martin Shubik, 1986. "Enough Commodity Money and the Selection of a Unique Competitive Equilibrium," Cowles Foundation Discussion Papers 804, Cowles Foundation, Yale University. [Downloadable!]
  6. Martin Shubik & Shuntian Yao, 1989. "The Transactions Cost of Money (A Strategic Game Analysis)," Cowles Foundation Discussion Papers 903, Cowles Foundation, Yale University. [Downloadable!]
  7. Shubik, Martin, 1987. "The unique minimal cash flow competitive equilibrium," Economics Letters, Elsevier, vol. 25(4), pages 303-306. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Martin Shubik & D.P. Tsomocos, 1993. "A Strategic Market Game with Seigniorage Costs of Fiat Money," Cowles Foundation Discussion Papers 1043, Cowles Foundation, Yale University. [Downloadable!]
  2. Raphael A. Espinoza & Charles A. E. Goodhart & Dimitrios P. Tsomocos, 2007. "Endogenous State Prices, Liquidity, Default, and the Yield Curve," OFRC Working Papers Series 2007fe01, Oxford Financial Research Centre. [Downloadable!]
    Other versions:
  3. Raphael A. Espinoza & Dimitrios P. Tsomocos, 2008. "Liquidity and Asset Prices," OFRC Working Papers Series 2008fe28, Oxford Financial Research Centre. [Downloadable!]
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