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Loan-monitoring And Deposit-servicing By Commercial Banks In A Stationary Environment

Author

Listed:
  • John Hartwick

Abstract

We take up the hypothesis that risk premiums on equities are embodying the costs incurred by equity holders in monitoring the firms which they have invested in. This idea is a key ingredient in our construction of a two sector neoclassical model with widget producing firms and commercial banks. So-called user costs or interest rate spreads are key prices of commercial bank services in the model. Commercial banks produce deposit services (check-writing services or transactions services) and lending services to widget producers.

Suggested Citation

  • John Hartwick, 1999. "Loan-monitoring And Deposit-servicing By Commercial Banks In A Stationary Environment," Working Paper 979, Economics Department, Queen's University.
    • Handle: RePEc:qed:wpaper:979
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    File URL: https://www.econ.queensu.ca/sites/econ.queensu.ca/files/qed_wp_979.pdf
    File Function: First version 1999
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    More about this item

    Keywords

    National Accounting; Commercial Banking; Monitoring Activity; General Equilibrium;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • P12 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Enterprises

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