Money, intermediation, and banking

Money, credit and banking

In monetary models in which agents are subject to trading shocks there is typically an ex-post inefficiency in that some agents are holding idle balances while others are cash constrained. This inefficiency creates a role for financial intermediaries, such as banks, who accept nominal deposits and make nominal loans. We show that in general financial intermediation improves the allocation and t...

Money, Banking, and Finance

Payment Intermediation and the Origins of Banking

The medieval banks of continental Europe facilitated trade by serving as payment intermediaries. Depositors commonly would pay one another by transferring bank balances with the aid of overdraft credit. We model this process in an environment of intermediate good exchange with incomplete contract enforcement. Our model suggests that the early banks were capable of accessing the “netting credit”...

Financial Markets , Money , and Banking

■ Abstract The study of financial markets, money, and banking is largely considered the purview of economics. Yet sociologists have contributed greatly to understanding financial relations since the early history of the discipline. This review begins with an overview of classical sociological approaches to financial markets, money, and banking and then describes how research in these areas expl...

Private Money and Banking Regulation ⇤

We show that the regulation of lending practices is desirable for the optimal provision of private money. In an environment in which bankers cannot commit to repay their creditors, neither an unregulated banking system nor a form of narrow banking in which banks hold 100% in reserves can provide the socially efficient amount of money. If bankers provided such an amount, then they would prefer t...