IDEAS home Printed from https://ideas.repec.org/p/fce/doctra/1002.html

Financial Intermediaries and Transaction Costs

Author

Listed:
  • Augusto Hasman

    (Observatoire Français des Conjonctures Économiques and SKEMA Business School)

  • Margarita Samartin

    (Business Department, Universidad Carlos III de Madrid)

  • Jos van Bommel

    (Universidad Cardenal Herrera)

Abstract

We present an overlapping generations model with spatial separation and agents who face unsystematic liquidity risk. In a pure exchange economy, agents engage in life cycle portfolio rebalancing. In an intermediated economy, intergenerational banks or mutual funds cater to diversified clienteles so as to avoid rebalancing transactions. In equilibrium, these intermediaries pay redemptions with portfolio income and never sell secondary assets. We also find that the pure exchange economy has a downward sloping yield curve and is inherently cyclical.

Suggested Citation

  • Augusto Hasman & Margarita Samartin & Jos van Bommel, 2010. "Financial Intermediaries and Transaction Costs," Documents de Travail de l'OFCE 2010-02, Observatoire Francais des Conjonctures Economiques (OFCE).
    • Handle: RePEc:fce:doctra:1002
    as

    Download full text from publisher

    File URL: http://www.ofce.sciences-po.fr/pdf/dtravail/WP2010-02.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. von Thadden, Ernst-Ludwig, 1998. "Intermediated versus Direct Investment: Optimal Liquidity Provision and Dynamic Incentive Compatibility," Journal of Financial Intermediation, Elsevier, vol. 7(2), pages 177-197, April.
    2. Robert E. Lucas, 2001. "Inflation and Welfare," International Economic Association Series, in: Axel Leijonhufvud (ed.), Monetary Theory as a Basis for Monetary Policy, chapter 4, pages 96-142, Palgrave Macmillan.
    3. Ernst-Ludwig VON THADDEN, 1996. "Optimal Liquidity Provision and Dynamic Incentive Compatibility," Cahiers de Recherches Economiques du Département d'économie 9604, Université de Lausanne, Faculté des HEC, Département d’économie.
    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


    Cited by:

    1. Cheng-Te Tseng & Shari S. C. Shang, 2021. "Exploring the Sustainability of the Intermediary Role in Blockchain," Sustainability, MDPI, vol. 13(4), pages 1-21, February.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. repec:rza:wpaper:208 is not listed on IDEAS
    2. Paustian, Matthias & Stoltenberg, Christian, 2008. "Optimal interest rate stabilization in a basic sticky-price model," Journal of Economic Dynamics and Control, Elsevier, vol. 32(10), pages 3166-3191, October.
    3. Ricardo Reis, 2016. "Can the Central Bank Alleviate Fiscal Burdens?," Discussion Papers 1701, Centre for Macroeconomics (CFM).
    4. Arman Mansoorian & Mohammed Mohsin, 2004. "Monetary policy in a cash‐in‐advance economy: employment, capital accumulation, and the term structure of interest rates," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 37(2), pages 336-352, May.
    5. Javier Garcia Cicco & Patricio Goldstein & Federico Sturzenegger, 2023. "Permanent and Transitory Monetary Shocks around the World," Working Papers 275, Red Nacional de Investigadores en Economía (RedNIE).
    6. William A. Barnett & Marcelle Chauvet & Heather L. R. Tierney, 2011. "Measurement Error in Monetary Aggregates: A Markov Switching Factor Approach," World Scientific Book Chapters, in: Financial Aggregation And Index Number Theory, chapter 7, pages 207-249, World Scientific Publishing Co. Pte. Ltd..
    7. repec:spo:wpmain:info:hdl:2441/2082 is not listed on IDEAS
    8. Lawrence Sáez & Xianwen Shi, 2004. "Liquidity Pools, Risk Sharing, and Financial Contagion," Journal of Financial Services Research, Springer;Western Finance Association, vol. 25(1), pages 5-23, February.
    9. Alexander Zimper, 2015. "Bank-Deposit Contracts Versus Financial-Market Participation in Emerging Economies," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 51(3), pages 525-536, May.
    10. Max Gillman & Michal Kejak, 2005. "Inflation and Balanced-Path Growth with Alternative Payment Mechanisms," Economic Journal, Royal Economic Society, vol. 115(500), pages 247-270, January.
    11. Eydam, Ulrich & Leupold, Florian, 2024. "What is it good for? On the inflationary effects of military conflicts," International Economics, Elsevier, vol. 179(C).
    12. Thomas Philippon, 2015. "Has the US Finance Industry Become Less Efficient? On the Theory and Measurement of Financial Intermediation," American Economic Review, American Economic Association, vol. 105(4), pages 1408-1438, April.
    13. Luisanna Onnis & Patrizio Tirelli, 2015. "Shadow economy: Does it matter for money velocity?," Empirical Economics, Springer, vol. 49(3), pages 839-858, November.
    14. Davoodalhosseini, Seyed Mohammadreza, 2022. "Central bank digital currency and monetary policy," Journal of Economic Dynamics and Control, Elsevier, vol. 142(C).
    15. Aruoba, S. Boragan & Waller, Christopher J. & Wright, Randall, 2011. "Money and capital," Journal of Monetary Economics, Elsevier, vol. 58(2), pages 98-116, March.
    16. Blaszkiewicz, Monika & Konieczny, Jerzy & Myslinska, Anna & Radziwil, Artur & Przemyslaw, Wozniak, 2002. "Some benefits of reducing inflation in transition economies," BOFIT Discussion Papers 16/2002, Bank of Finland Institute for Emerging Economies (BOFIT).
    17. Miao, Jianjun & Xie, Danyang, 2013. "Economic growth under money illusion," Journal of Economic Dynamics and Control, Elsevier, vol. 37(1), pages 84-103.
    18. Pedro Teles & Ruilin Zhou, 2005. "A stable money demand: Looking for the right monetary aggregate," Economic Perspectives, Federal Reserve Bank of Chicago, vol. 29(Q I), pages 50-63.
    19. Shiratsuka, Shigenori, 2001. "Is There a Desirable Rate of Inflation? A Theoretical and Empirical Survey," Monetary and Economic Studies, Institute for Monetary and Economic Studies, Bank of Japan, vol. 19(2), pages 49-83, May.
    20. Guangyan Chen & Feng Qiu & Xiaowen Dai & Hongxing Lan & Jiahao Song, 2022. "Research on the Influence of Informal Employment on Residents’ Happiness in China: Empirical Analysis Based on CLDS Data," IJERPH, MDPI, vol. 19(15), pages 1-14, July.
    21. Kurozumi, Takushi, 2006. "Determinacy and expectational stability of equilibrium in a monetary sticky-price model with Taylor rule," Journal of Monetary Economics, Elsevier, vol. 53(4), pages 827-846, May.
    22. Oikawa, Koki & Ueda, Kozo, 2018. "The optimal inflation rate under Schumpeterian growth," Journal of Monetary Economics, Elsevier, vol. 100(C), pages 114-125.

    More about this item

    Keywords

    ;
    ;
    ;

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fce:doctra:1002. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Francesco Saraceno (email available below). General contact details of provider: https://edirc.repec.org/data/ofcspfr.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.