This paper models an economy in which risk-averse savers and risk-neutral entrepreneurs make investment decisions. Aggregate investment in high-yielding risky projects is maximized when risk-neutral agents bear all nondiversifiable risks. A role of banks is to assume nondiversifiable risks by pledging their capital in addition to diversifying risks. Banks, however, do not completely eliminate r...

Explicit deposit insurance has been spreading rapidly in recent years, even to countries with low levels of financial and institutional development. This paper documents the extent of cross-country differences in deposit-insurance design and reviews empirical evidence on how particular design features affect private market discipline, banking stability, financial development, and the effectiven...

In 2014 the main tendency of Ukrainian economy was the losing of great deposit value. In this article we wish to explore a deposit portfolio structure in macroeconomic instability. We applied two approaches to the standard optimization portfolio: risk minimization for a given maximum return and return maximization for a given maximum risk. Of the two approaches to the standard optimization prob...

I study the role of deposit accounts in bank-firm lending relationships, using a dataset with detailed information about all Norwegian firms’ bank deposit and loan account balances. I show that firms are more likely to increase borrowing from a bank where they hold deposit accounts, and less likely to end the lending relationship. In regressions with both firm and bank fixed effects, I find tha...

Example Consider a banking institution, where customers have accounts of different types, e.g., checking, savings, loan, mortgage, etc. Customers use these accounts to handle their financial transactions, e.g., they sign checks for payments, they deposit money in their accounts, etc. Customers receive bank cards to facilitate their transactions. For the convenience of their customers, the bank ...