Liquidity Provision and Banking Crises with Heterogeneous Agents
AbstractIncentive compatibility constraints that produce contracts where short-term funds choose not to deposit will prevent banking crises, but at the cost of losing the insurance function of banks. Restricting short-term deposits may not be optimal at all times, since the cost of doing so may be greater than the expected loss in allowing crises to occur with positive probability.
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Bibliographic InfoPaper provided by Society for Economic Dynamics in its series 2007 Meeting Papers with number 976.
Date of creation: 2007
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- Fontenla, Matías, 2009. "Liquidity Provision And Banking Crises With Heterogeneous Agents," Macroeconomic Dynamics, Cambridge University Press, vol. 13(S1), pages 118-132, May.
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