Alternative approaches to the theory of the banking firm

Baltensperger, Ernst

doi:10.1016/0304-3932(80)90016-1

Cited by 321 publications

(160 citation statements)

References 31 publications

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“…t N ht , where ! t denotes the economy-wide real 1 1 In reserve management models, optimal reserves are a function of deposit ‡uctuations (see Morrison (1966), Poole (1968) and Baltensperger (1980) for further discussions).…”

Section: Householdsmentioning

confidence: 99%

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Excess reserves, monetary policy and financial volatility

Primus

2017

Journal of Banking & Finance

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This paper examines the …nancial and real e¤ects of excess reserves in a New Keynesian Dynamic Stochastic General Equilibrium (DSGE) model with monopoly banking, credit market imperfections and a cost channel. The model explicitly accounts for the fact that banks hold excess reserves and they incur costs in holding these assets. Simulations of a shock to required reserves show that although raising reserve requirements is successful in sterilizing excess reserves, it creates a procyclical e¤ect for real economic activity. This result implies that …nancial stability may come at a cost of macroeconomic stability. The …ndings also indicate that using an augmented Taylor rule in which the policy interest rate is adjusted in response to changes in excess reserves reduces volatility in output and in ‡ation but increases ‡uctuations in …nancial variables. To the contrary, using a countercyclical reserve requirement rule helps to mitigate ‡uctuations in excess reserves, but increases volatility in real variables. JEL Classi…cation Numbers: E43, E52, E58

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Section: Householdsmentioning

confidence: 99%

“…Substituting (12) in (10) and imposing a zero-pro…t condition, the …nal good price is represented by,…”

Section: Final Good-producing Firmmentioning

confidence: 99%

Excess reserves, monetary policy and financial volatility

Primus

2017

Journal of Banking & Finance

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“…7 Since in this setting we have two types of classes, i.e. short-and long-term, we exploit the courtesy of the CRRA function and allow for different risk-aversion weights, depending on maturity (see for instance Baltensperger (1980). The maximization problem of each bank becomes…”

Section: Allocation Strategymentioning

confidence: 99%

“…Thirdly, banks trade with each other using the search-and-match algorithm, which also determines the price of interbank lending explicitly. Fourthly, in our setting the banks' optimization problem distinguishes between short-and long-term investments through liquidity preferences (as suggested by for instance Baltensperger, 1980). Last but not least, we extend the scope of the analysis to cover various shock and policy scenarios, which brings novel results on interbank networks and their shock-susceptibility.…”

Section: Introductionmentioning

confidence: 98%

Interbank loans, collateral and modern monetary policy

Wolski

Leur

2016

Journal of Economic Dynamics and Control

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“…Research in banking theory and financial economics has since retained the assumptions of mainstream firm theory to elaborate specific functions of banks (Fama, 1980a;Diamond & Dybvig, 1983;Baltensperger, 1980;Wray, 2013). This approach to banks as multi-function, profit-maximizing firms has distanced banking theory from institutional and organizational approaches in other disciplines.…”

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confidence: 99%

Alternative Banking and Theory

Butzbach

Mettenheim

2014

Accounting, Economics, and Law: A Convivium

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Unlike business models of private banks based on profit maximization and shareholder-oriented governance, alternative banks (such as cooperative banks, government savings banks, and special purpose banks) share business models based on sustainable returns with longer time horizons, corporate missions that include social and public policy goals, and stakeholder-oriented governance. Strong evidence from recent research suggests that alternative banks often equal or outperform joint-stock banks in terms of efficiency, profitability, and risk management. This counters core ideas in contemporary banking theory and expectations of regulators about the superiority of private ownership and market-based banking. Concepts and theories from banking studies help explain how alternative banks outperform private banks in core functions such as creating and managing liquidity, pooling deposits, and reducing information asymmetries and agency costs. However, heterodox theories of the firm and institutional approaches to competitive advantage broaden the scope of analysis to explain further historical, social, and organizational advantages (and risks) in alternative banking. Alternative banks therefore require, and may inspire, alternative theories of banking and new approaches to bank regulation.

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Alternative approaches to the theory of the banking firm

Cited by 321 publications

References 31 publications

Excess reserves, monetary policy and financial volatility

Excess reserves, monetary policy and financial volatility

Interbank loans, collateral and modern monetary policy

Alternative Banking and Theory

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