Article ID Journal Published Year Pages File Type
967982 Journal of Monetary Economics 2007 16 Pages PDF
Abstract

We describe a dynamic model of financial intermediation in which fundamental characteristics of the economy imply a unique equilibrium path of bank and financial market lending. Yet we also show that economies whose fundamental characteristics have converged may continue to have very different financial structures. Because setting up financial markets is costly in our model, economies that emphasize bank lending are more likely to continue doing so in the future, all else equal.

Related Topics
Social Sciences and Humanities Economics, Econometrics and Finance Economics and Econometrics
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