Financial development and reserve requirements
نویسنده
چکیده
Many countries have either eliminated or considerably reduced reserve requirements during the last decade. This paper derives the optimal reserve requirements of a simple economy with production and ®nancial intermediation subject to costly state veri®cation, and shows that one motivation for the widely observed reduction in the level of mandatory reserves is linked to the process of ®nancial markets development. Ó 1999 Elsevier Science B.V. All rights reserved. JEL classi®cation: E44; E52
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