Optimal liquidity provision through a demand deposit scheme: The Jacklin critique revisited
AbstractWe derive conditions such that optimal liquidity provisions through a demand deposit scheme can be sustainably implemented in a subgame perfect Nash equilibrium under the assumption that renegade investors have free access to ex-post asset markets. As our qualitative main finding we demonstrate that such sustainability is more likely for poor than for richÂ”scheme participants in terms of future income. By establishing sustainability for low future income populations, our formal analysis therefore offers an important qualification of Jacklin's(1987) influential claim that an optimal demand deposit scheme is not sustainable whenever there exists the possibility of an ex-post asset market.
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Bibliographic InfoPaper provided by Economic Research Southern Africa in its series Working Papers with number 208.
Length: 25 pages
Date of creation: 2011
Date of revision:
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Jacklin critique; Â…nancial intermediation; asset markets;
Other versions of this item:
- Alexander Zimper, 2013. "Optimal Liquidity Provision Through a Demand Deposit Scheme: The Jacklin Critique Revisited," German Economic Review, Verein für Socialpolitik, vol. 14(1), pages 89-107, 02.
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
- G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-04-09 (All new papers)
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.:
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201334, University of Pretoria, Department of Economics.
- Alexander Zimper, 2013. "Bank Deposit Contracts Versus Financial Market Participation in Emerging Economies," Working Papers 354, Economic Research Southern Africa.
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