Evidence has been mounting (over the centuries) that the interest based debt financing regime is under ever increasing distress. All of the earlier crises whatever label they carried− exchange rate crisis or banking crisis – have been debt crises in essence. At the present, empirical research suggests that the debt-to-GDP ratio of the richest members of the G-20 threatens to touch 120% m...

We find that the interest margin and the risk affect strongly the capital ratio. They explain the excess of the capital held by the Tunisian banks. So, this excess is not explained only by regulatory pressures. The deposit variability and the intermediation rate have the same sign. But, the equity cost and the deposits ratio both have a negative impact. The main determinants are the same for al...

Can allowing foreign participation in the banking sector increase real output, despite the imperfectly competitive nature of the industry? Using a new model of heterogeneous, imperfectly competitive lenders and a simple search process, we show how endogenous markups (the net interest margin commonly used to proxy lending-to-deposit rate spreads) can increase with FDI while the rates banks charg...

a r t i c l e i n f o JEL classification: E31 E52 E61 F33 F41 Keywords: Currency union Optimal monetary policy Redistributive monetary policy Financial frictions Interest rate spreads Spread-adjusted Taylor rule We introduce " financial imperfections " – asymmetric net wealth positions, incomplete risk-sharing, and interest rate spreads across member countries – in a prototypical two-country cu...

We show that if policymakers compute the optimal unconstrained interest-rate rule within a Taylor-type class, they may be led to rules that generate indeterminacy and/or instability under learning. This problem is compounded by uncertainty about structural parameters since an optimal rule that is determinate and stable under learning for one calibration may be indeterminate or unstable under le...

The idea of an exogenous money supply—controlled entirely through central bank interventions—was a fundamental tenet of monetarism and New Classical economics. Post Keynesians have developed an extensive literature arguing that the money supply is in fact endogenous—that market forces combine with central banks in establishing the money supply. But Post Keynesians disagree on a related question...