Money, Credit and Banking

Aleksander Berentsen, Gabriele Camera and Christopher Waller

No 219, IEW - Working Papers from Institute for Empirical Research in Economics - University of Zurich

Abstract: In many situations, some people hold large money balances but have no particular urgency to spend them while others are liquidity constrained. This problem creates a role for financial intermediaries who accept nominal deposits and make nominal loans. We show that financial intermediation improves the allocation away from the Friedman rule. The gains in welfare come from the payment of interest on deposits and not from relaxing borrowers\rquote liquidity constraints. We also demonstrate that increasing the rate of inflation can be welfare improving when credit rationing occurs.

Keywords: Money; Credit; Rationing; Banking (search for similar items in EconPapers)
JEL-codes: A12 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (252)

Downloads: (external link)
https://www.zora.uzh.ch/id/eprint/52213/1/iewwp219.pdf (application/pdf)

Related works:
Journal Article: Money, credit and banking (2007)
Working Paper: Money, Credit and Banking (2005)
Working Paper: Money, Credit, and Banking (2004)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:zur:iewwpx:219

Access Statistics for this paper

More papers in IEW - Working Papers from Institute for Empirical Research in Economics - University of Zurich
Bibliographic data for series maintained by Severin Oswald ().