Credit, Intermediation And The Macroeconomy

Description:
Developments in theories of financial markets and institutions, using the tools of the economics of uncertainty and of contracts, as well as results in game theory, have, over the last two decades, constituted an exciting and burgeoning field of research. This collection of readings draws together highlights of the 'second generation' literature in this area, emphasizing the theoretical, institutional, and policy-oriented regulatory implications of some of the key modeling techniques in the field. The collection divides into seven sections covering the monitoring role of banks and other intermediaries; liquidity demand and the role of banks and the government; bank runs and financial crises; bank regulation; inter-bank competition and bank--firm relationships; comparative financial systems; and imperfect credit markets and the macro economy. Each section comprises four articles previously published in top-ranking economics and finance journals, plus a discussion by a prominent scholar, who provides a synthesis and critique of the literature, and suggests promising directions for future research and application of results.

Table of Contents:
Introduction; PART I: MONITORING BY AND OF BANKS; 1. Financial Intermediary Coalitions; 2. The Role of Demandable Debt in Structuring Optimal Banking Arrangements; 3. Monitoring, Liquidation, and Security Design; 4. Financial Intermediation with Risk Aversion; Discussion; PART II: LIQUIDITY PROVISION VIA BANKS AND MARKETS; 5. Liquidity, Banks, and Markets; 6. Private and Public Supply of Liquidity; 7. Financial Intermediation versus Stock Markets in a Dynamic Intertemporal Model; 8. The Governance of Exchanges: Members' Cooperatives versus Outside Ownership; Discussion; PART III: BANK RUNS AND FINANCIAL CRISES; 9. Banking Panics, Information and Rational Expectations Equilibrium; 10. Unique Equilibrium in a Model of Self-Fulfilling Currency Attacks; 11. Contagion and Efficiency in Gross and Net Interbank Payment Systems; Discussion; PART IV: REGULATION OF FINANCIAL INTERMEDIARIES; 12. Capital Requirements and the Behaviour of Commercial Banks; 13. Is the Glass-Steagall Act Justified? A Study of the U.S. Experience with Universal Banking before 1993; 14. Optimal Design of Bank Bailouts: The case of transition economies; Discussion; PART V: FINANCIAL CONTRACTING AND INTERBANK COMPETITION; 15. Reputation and Discretion in Fiancial Contracting; 16. The Effect of Credit Market Competition on Lending Relationships; 17. Long-Term Contracts, Short-Term Investment and Monitoring; 18. Competition Among Financial Intermediaries when Diversification Matters; Discussion; PART VI: COMPARATIVE FINANCIAL SYSTEMS; 19. Credit and Efficiency in Centralized and Decentralized Economies; 20. Proprietary Information, Financial Intermediation, and Research Incentives; 21. Financial System Architecture; 22. Financial Markets, Intermediaries, and Intertemporal Smoothing; Discussion; PART VII: CREDIT MARKETS, INTERMEDIATION, AND THE MACROECONOMY; 23. Financial Intermediation, Loanable Funds, and the Real Sector; 24. Credit Cycles; 25. Endogenous Cycles in a Stiglitz-Weiss Economy; Discussion