Loading...
Please wait, while we are loading the content...
Similar Documents
Banks, Liquidity Management, and Monetary Policy* (2014)
| Content Provider | CiteSeerX |
|---|---|
| Author | Bianchi, Javier Bigio, Saki |
| Abstract | ABSTRACT __________________________________________________________________________________ We develop a new framework to study the implementation of monetary policy through the banking sys-tem. Banks finance illiquid loans by issuing deposits. Deposit transfers across banks must be settled using central bank reserves. Transfers are random and therefore create liquidity risk, which in turn determines the supply of credit and the money multiplier. We study how different shocks to the banking system and monetary policy affect the economy by altering the trade-off between profiting from lending and incur-ring greater liquidity risk. We calibrate our model to study quantitatively why banks have recently in-creased their reserve holdings but have not expanded lending despite policy efforts. Our analysis under-scores an important role of disruptions in interbank markets, followed by a persistent credit demand |
| File Format | |
| Publisher Date | 2014-01-01 |
| Access Restriction | Open |
| Subject Keyword | Reserve Holding Persistent Credit Demand Money Multiplier Deposit Transfer Different Shock Central Bank Reserve Interbank Market Liquidity Risk Policy Effort Bank Finance Illiquid Loan Liquidity Management Create Liquidity Risk Banking Sys-tem |
| Content Type | Text |
