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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- Neil Wallace, 1988. "Another attempt to explain an illiquid banking system: the Diamond and Dybvig model with sequential service taken seriously," Quarterly Review, Federal Reserve Bank of Minneapolis, issue Fall, pages 3-16.
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Federal Reserve Bank of San Francisco, issue Sep.
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- Bryant, John, 1980. "A model of reserves, bank runs, and deposit insurance," Journal of Banking & Finance, Elsevier, vol. 4(4), pages 335-344, December.
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