Microeconomic foundation of lender of last resort from the viewpoint of payments

Yasuo Maeda, Yoshikiyo Sakai

研究成果: Article査読

抄録

We construct a model to clarify the mechanism by which the lender of last resort (LLR) can prevent bank runs. In our model, a bank has both the function of facilitating payments in which inside money is settled using outside money and the function of financial intermediation using a deposit contract. The deposit contract might lead to a bank run, and might even contribute to an efficient allocation. Therefore, to consider the liquidity supply by the LLR, we introduce the deposit contract as a factor of instability in the banking model. We show that the LLR can assist in the recovery of both the efficiency and stability of the financial system.

本文言語English
ページ(範囲)178-193
ページ数16
ジャーナルJapanese Economic Review
59
2
DOI
出版ステータスPublished - 2008 6月 1

ASJC Scopus subject areas

  • 経済学、計量経済学

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