Banks, credibility and macroeconomic evolution after a production shock

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)

Full text not currently available from Enlighten.


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
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
ISSN (Online):1467-9957
Published Online:01 December 2010

University Staff: Request a correction | Enlighten Editors: Update this record