Angeles, L. (2019) On the nature of banks. Kyklos, 72(3), pp. 381-399. (doi: 10.1111/kykl.12204)
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Abstract
Two views exist regarding the nature of the banking business. The dominant view defines banks as financial intermediaries – institutions in the business of transferring money from savers to borrowers. An alternative view advances that banks finance borrowers via money creation. I explain the differences between these two views and argue for the superiority of the latter one as a description of modern banking. I discuss the implications for economic analysis and explain how the connection between bank lending and money creation helps us understand the effects of banking on economic activity.
| Item Type: | Articles |
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| Status: | Published |
| Refereed: | Yes |
| Glasgow Author(s) Enlighten ID: | Angeles, Professor Luis |
| Authors: | Angeles, L. |
| College/School: | College of Social Sciences > Adam Smith Business School > Economics |
| Journal Name: | Kyklos |
| Publisher: | Wiley-Blackwell Publishing Ltd. |
| ISSN: | 0023-5962 |
| ISSN (Online): | 1467-6435 |
| Published Online: | 15 March 2019 |
| Copyright Holders: | Copyright © 2019 John Wiley & Sons |
| First Published: | First published in Kyklos 72(3):381-399 |
| Publisher Policy: | Reproduced in accordance with the copyright policy of the publisher |
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