What would be the effect of imposing a 100 percent reserve requirement to depository institutions? This paper contends that reserves do not compete with loans on the asset side of bank’s balance sheets. Thus, they only ...
This paper presents a theoretical model based on risk diversification to rationalize the observed dichotomy in money markets by which small banks are net providers of funds while large banks become net purchasers. Unlike ...
Rivero Leiva, David; Rodríguez Mendizábal, Hugo(2018-03)
This paper incorporates endogenous money creation into the liquidity mismatch problem
of Diamond and Dybvig (1983). We characterize a nominal economy where demandable
deposits are created through lending. Depositors use ...
This paper presents a new stylized fact about bank nonperforming loans. According to data for the US, the average of the ratio of noncurrent loans to total loans for large banks presents a very high negative correlation ...
