Piggy Banks: Financial Intermediaries as a Commitment to Save

Financial Intermediaries and Markets

A complex financial system comprises both financial markets and financial intermediaries. We distinguish financial intermediaries according to whether they issue complete contingent contracts or incomplete contracts. Intermediaries such as banks that issue incomplete contracts, e.g., demand deposits, are subject to runs, but this does not imply a market failure. A sophisticated financial system...

Are banks special? Some notes on Tobin's theory of financial intermediaries

Emerging Markets and Financial Intermediaries

Over the last fifteen years, emerging economies have experienced abrupt changes in bond spreads and large movements in capital flows. We propose a simple general equilibrium model where international investors hire fund managers to invest their capital either in the bonds of an emerging economy or in a riskless asset. We model the emerging economy as a small-open economy subject to an aggregate...

Sensitivity Analysis of Banks Efficiency to the Financial Variables

Discriminant analysis is a classification method that can predict the group membership of a newly sampled observation. In discriminant analysis, classification of new observed data has an uncertainty. In this paper, the confidence degree is introduced to determine the confidence of classification of new observed data. Then, a Monte Carlo-based sensitivity analysis is applied to an assessment of...

Financial Markets as a Commitment Device for the Government

How does the presence of financial markets shape the government’s ability to implement social redistribution? Individuals typically do not constrain consumption to equal their net-of-tax income every period. Instead, access to financial markets allows them to allocate their resources over time. On the other hand, the markets that individual agents trade in are usually incomplete in the sense th...