Liquidity Creation through Banks and Markets : Multiple Insurance and Limited Market Access
The paper surveys theories of the intertemporal allocation of funds through demand deposits and anonymous markets, first separately and then in an integrated model. It reviews some work on the role of market frictions and asset characteristics, and suggests that the interplay between these two is crucial in explaining the observed coexistence of demand deposits and anonymous markets.
|Date of creation:||Nov 1998|
|Date of revision:|
|Publication status:||Published in European Economic Review, vol. 43, 1999, pp. 991-1006|
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Web page: http://www.hec.unil.ch/deep/publications/cahiers/series
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- Douglas W. Diamond & Raghuram G. Rajan, 2001.
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- 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.
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- Jacklin, Charles J & Bhattacharya, Sudipto, 1988. "Distinguishing Panics and Information-Based Bank Runs: Welfare and Policy Implications," Journal of Political Economy, University of Chicago Press, vol. 96(3), pages 568-92, June.
- Qi, Jianping, 1994. "Bank Liquidity and Stability in an Overlapping Generations Model," Review of Financial Studies, Society for Financial Studies, vol. 7(2), pages 389-417.
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