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Banks, Credibility and Macroeconomic Evolution after a Production Shock

Vinogradov, Dmitri (2009) Banks, Credibility and Macroeconomic Evolution after a Production Shock. Working Paper. EBS Working Papers, Colchester.

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Abstract

One of the important functions of financial intermediation is intertemporal risk smoothing. This paper studies the effects of a production shock in a closed economy and compares the abilities of market-based and bank-based financial systems in processing the shock. The analysis of the shock propagation indicates that a competitive banking system may collapse in absence of a proper regulation. Paradoxically, it is the credibility of banks that makes bank-based economies fragile. A necessary and sufficient condition for successfull bailout schemes is proposed.

Item Type: Monograph (Working Paper)
Uncontrolled Keywords: Banks, financial crisis, shock, regulation
Subjects: H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
Divisions: Faculty of Social Sciences > Essex Business School
Faculty of Social Sciences > Essex Business School > Essex Finance Centre
Depositing User: Users 161 not found.
Date Deposited: 03 Jan 2014 10:44
Last Modified: 13 Nov 2015 16:50
URI: http://repository.essex.ac.uk/id/eprint/8097

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