Vinogradov, D. (2011) Banks, credibility and macroeconomic evolution after a production shock. Manchester School, 79(3), pp. 480-509. (doi: 10.1111/j.1467-9957.2009.02166.x)
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Abstract
One of the important functions of financial intermediation is intertemporal risk smoothing. In this paper we study the effects of a production shock in a closed economy and compare 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 the absence of a proper regulation. Paradoxically, it is the credibility of banks that makes bank-based economies fragile. A necessary and sufficient condition for successful bailout schemes is proposed.
Item Type: | Articles |
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Status: | Published |
Refereed: | Yes |
Glasgow Author(s) Enlighten ID: | Vinogradov, Professor Dmitri |
Authors: | Vinogradov, D. |
College/School: | College of Social Sciences > Adam Smith Business School > Accounting and Finance |
Journal Name: | Manchester School |
Publisher: | Wiley |
ISSN: | 1463-6786 |
ISSN (Online): | 1467-9957 |
Published Online: | 01 December 2010 |
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