Advanced Search
MyIDEAS: Login to save this paper or follow this series

Banks as Social Accountants and Screening Devices for the Allocation of Credit

Contents:

Author Info

  • Joseph E. Stiglitz
  • Andrew Weiss

Abstract

This paper presents and alternative perspective on the role of banks. We emphasize the ways in which banks act as social accountants and screening devices. In this view monetary disturbances have their effects through the disturbances which they induce in society's accounting system and in the mechanisms by which it is ascertained who is credit worthy. Because of asymmetric information, giving rise to credit rationing, interest rates do not play the simple allocative role ascribed by the conventional paradigm, and as a result the equilibrating forces provided by market mechanisms may be weak or virtually absent. The paper provides a critique of the transactions based approach to monetary theory, and sketches a general equilibrium formulation of the theory. The paper traces out some of the policy implications of the theory. We show that certain financial innovations, such as allowing for the more rapid recording of transactions, may actually be welfare reducing.

Download Info

If 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.
File URL: http://www.nber.org/papers/w2710.pdf
Download Restriction: no

Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 2710.

as in new window
Length:
Date of creation: Sep 1988
Date of revision:
Publication status: published as Essays in Monetary Econmics in Honor of Sir John Hicks, 1989 ed. A. Couralies and C. Goodhart, MacMillan Publishers
Handle: RePEc:nbr:nberwo:2710

Note: ME
Contact details of provider:
Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Phone: 617-868-3900
Email:
Web page: http://www.nber.org
More information through EDIRC

Related research

Keywords:

References

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.:
as in new window
  1. Fama, Eugene F., 1980. "Banking in the theory of finance," Journal of Monetary Economics, Elsevier, Elsevier, vol. 6(1), pages 39-57, January.
  2. Leland, Hayne E & Pyle, David H, 1977. "Informational Asymmetries, Financial Structure, and Financial Intermediation," Journal of Finance, American Finance Association, American Finance Association, vol. 32(2), pages 371-87, May.
  3. Kletzer, Kenneth M, 1984. "Asymmetries of Information and LDC Borrowing with Sovereign Risk," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 94(374), pages 287-307, June.
  4. Stiglitz, Joseph E, 1987. "The Causes and Consequences of the Dependence of Quality on Price," Journal of Economic Literature, American Economic Association, American Economic Association, vol. 25(1), pages 1-48, March.
  5. Stiglitz, Joseph E, 1974. "Incentives and Risk Sharing in Sharecropping," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 41(2), pages 219-55, April.
  6. Friedman, Milton, 1971. "A Monetary Theory of Nominal Income," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 79(2), pages 323-37, March-Apr.
  7. Alan S. Blinder & Joseph E. Stiglitz, 1983. "Money, Credit Constraints, and Economic Activity," NBER Working Papers 1084, National Bureau of Economic Research, Inc.
  8. Ordover, Janusz & Weiss, Andrew, 1981. "Information and the Law: Evaluating Legal Restrictions on Competitive Contracts," American Economic Review, American Economic Association, American Economic Association, vol. 71(2), pages 399-404, May.
  9. Eaton, Jonathan & Gersovitz, Mark & Stiglitz, Joseph E., 1986. "The pure theory of country risk," European Economic Review, Elsevier, Elsevier, vol. 30(3), pages 481-513, June.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Sau Lino, 2007. "New Pecking Order Financing for Innovative Firms: an Overview," Department of Economics and Statistics Cognetti de Martiis. Working Papers, University of Turin 200702, University of Turin.
  2. Bertocco Giancarlo, 2003. "The economics of financing firms: the role of banks," Economics and Quantitative Methods, Department of Economics, University of Insubria qf0312, Department of Economics, University of Insubria.
  3. Messori, Marcello, 2014. "A Schumpeterian analysis of the credit market," Structural Change and Economic Dynamics, Elsevier, Elsevier, vol. 28(C), pages 43-59.
  4. Hasan, Iftekhar & Wang, Haizhi & Zhou, Mingming, 2008. "Do better institutions improve bank efficiency? Evidence from a transitional economy," BOFIT Discussion Papers, Bank of Finland, Institute for Economies in Transition 28/2008, Bank of Finland, Institute for Economies in Transition.
  5. Sau Lino, 2010. "Instability and crisis in financial complex systems," CESMEP Working Papers, University of Turin 201001, University of Turin.
  6. Riccardo Lucchetti & Luca Papi & Alberto Zazzaro, 2000. "Banks' inefficiency and economic growth: a micro-macro approach," Heterogeneity and monetary policy, Universita di Modena e Reggio Emilia, Dipartimento di Economia Politica 0004, Universita di Modena e Reggio Emilia, Dipartimento di Economia Politica.
  7. Lee, Jaewoo, 1996. "Financial development by learning," Journal of Development Economics, Elsevier, Elsevier, vol. 50(1), pages 147-164, June.
  8. Sau Lino, 2009. "Gradualism and the Evolution of the Financial Structure in China," Department of Economics and Statistics Cognetti de Martiis. Working Papers, University of Turin 200903, University of Turin.
  9. Federico Ferretti, 2007. "Consumer credit information systems: a critical review of the literature. Too little attention paid by Lawyers?," European Journal of Law and Economics, Springer, Springer, vol. 23(1), pages 71-88, February.
  10. Lino Sau, 2012. "Evolution of China's financial system and its impact on economic development," International Journal of Economic Policy in Emerging Economies, Inderscience Enterprises Ltd, Inderscience Enterprises Ltd, vol. 5(1), pages 1-15.
  11. Hyytinen, Ari, 2001. "Information Production, Banking Competition and the Market Structure of the Banking Industry," Discussion Papers, The Research Institute of the Finnish Economy 749, The Research Institute of the Finnish Economy.
  12. Mornati, Fiorenzo & Becchio, Giandomenica & Marchionatti, Roberto & Cassata, Francesco, 2009. ""Quando l'economica italiana non era seconda a nessuno" Luigi Einaudi e la Scuola di Economia a Torino," CESMEP Working Papers, University of Turin 200910, University of Turin.
  13. Steven Ongena, 1999. "Lending Relationships, Bank Default and Economic Activity," International Journal of the Economics of Business, Taylor & Francis Journals, Taylor & Francis Journals, vol. 6(2), pages 257-280.
  14. Pietro Alessandrini & Alberto Zazzaro, 1998. "A 'possibilist' approach to regional banking systems and financial integration: The Italian experience," ERSA conference papers ersa98p132, European Regional Science Association.
  15. Gerhard Clemenz & Mona Ritthaler, 1992. "Credit markets with asymmetric information : a survey," Finnish Economic Papers, Finnish Economic Association, Finnish Economic Association, vol. 5(1), pages 12-26, Spring.
  16. Giancarlo Bertocco, 2007. "The characteristics of a monetary economy: a Keynes--Schumpeter approach," Cambridge Journal of Economics, Oxford University Press, Oxford University Press, vol. 31(1), pages 101-122, January.
  17. Hyytinen, Ari, 2003. "Information production and lending market competition," Journal of Economics and Business, Elsevier, Elsevier, vol. 55(3), pages 233-253.
  18. Bertocco Giancarlo, 2004. "Are banks really special? A note on the theory of financial intermediaries," Economics and Quantitative Methods, Department of Economics, University of Insubria qf04021, Department of Economics, University of Insubria.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:2710. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.