Commitment, banks and markets

• 成果类型: Article
• 署名作者: Antinolfi, Gaetano; Prasad, Suraj
• 署名单位: Washington University (WUSTL); University of New South Wales Sydney
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/j.jmoneco.2007.12.007
• 发表日期: 2008
• 页码: 265-277
• 关键词: Limited commitment; Deposit contracts; banks; financial markets; liquidity

摘要

We examine how banks and financial markets interact with one another to provide liquidity to investors. The critical assumption is that financial markets are characterized by limited enforcement of contracts, and in the event of default only a fraction of borrowers' assets can be seized. Limited enforcement reduces the fraction of assets that can be used as collateral and thus individuals subject to liquidity shocks face borrowing constraints. We show how banks endogenously overcome these borrowing constraints by pooling resources across several depositors, and increase the liquidity provided by financial markets. (C) 2007 Elsevier B.V. All rights reserved.