Are banks special? Some notes on Tobin's theory of financial intermediaries

Abstract

Since the 1960s, Tobin has set himself the objective of developing a macroeconomic model more general than that specified by Keynes in the General Theory. In his work, he explicitely deals with financial intermediaries and elaborates a 'new view' which, in contrast with the 'old view', maintains that there are no reasons to attribute a special role to the banks. This paper critically analyses Tobin's theory and shows that this theory overlooks an important function of banks highlighted by Keynes, and that the specification of this banks' function is the necessary condition to highlight the most significant aspects of what Keynes calls a monetary economy. These points enable us to draw some observations about the question of the financial system regulation

Financial sector reform and regulation in the Asia-Pacific region: a perspective

“…Bertocco (2011) critically analyses Tobin's theory and demonstrates that specification of the monetary function carried out by banks allows us to conclude, differently from Tobin, that the presence of banks and bank money radically changes the structure of the economic system. This conclusion raises important questions concerning financial system regulation.…”

“…The first of the papers on banking markets begins with the theoretical paper by Bertocco (2011), who asks the important question of whether banks are indeed special and therefore warrant the independent treatment often extended by governments and regulators? This is especially important given changes in the competitive structure of emerging financial markets that has reduced the number of intermediaries.…”

“…The study of Bertocco (2011) follows on from the work of Tobin (1982), who also considered the role of financial intermediaries and whether a special role should be provided to banks. Bertocco (2011) critically analyses Tobin's theory and demonstrates that specification of the monetary function carried out by banks allows us to conclude, differently from Tobin, that the presence of banks and bank money radically changes the structure of the economic system.…”

A Systematic Review of Financial Intermediaries Research

“…From a country perspective, 22 countries were represented in the systematic review of FI research. As shown in figure 4, 19 out of the 43 articles reviewed representing 44.2% are conceptual in nature, whereby the authors gave insights on models of FI (Fecht et al, 2008;Bertocco 2011;Dewachter & Wouters, 2016). Interestingly, a large number of the peer-reviewed English journals (55.8%, 24 out of 43) are empirical in nature and focused mainly on risk management (Alexander & Baptista, 2009;Gounopoulos et al, 2013;Delis et al, 2014,), international debts (Chue & Cook, 2008), trading schemes and internet banking (Zhang et al, 2012;Atanasov et al, 2015), economic fluctuations and money laundering (Otusanya et al, 2011 ;Lhuisser, 2017), financial regulations (Kim, 2011;Beck et al, 2014;Habel & Werfel, 2016), financial vehicles (Ciccarone, 2008 ;Morgan & Samolyk, 2012), reputation and borrowing (Fishman, 2009;Chen et al, 2017) and ownership structure and firm value (Fischer & Mahfoudhi, 2009 ;William & Young , 2012).…”

Conventional bank and Islamic banking as institutions: similarities and differences

“…Oladepo (2010) has studied the impacts of mergers and acquisition on the efficiency of financial institutions. Meanwhile, Bertacco (2011) shows that bank plays a special role because depositors give their trust to the bank to decide on the amount of money that they are willing to borrow. Khaldi and Hamdouni (2011) explain that a financial intermediary can transform particular types of assets into others.…”