The Roles of Banks in Financial Systems

@inproceedings{Allen2012TheRO,
  title={The Roles of Banks in Financial Systems},
  author={Franklin Allen and Elena Carletti},
  year={2012}
}
Banks perform various roles in the economy. First, they ameliorate the information problems between investors and borrowers by monitoring the latter and ensuring a proper use of the depositors’ funds. Second, they provide intertemporal smoothing of risk that cannot be diversified at a given point in time as well as insurance to depositors against unexpected consumption shocks. Because of the maturity mismatch between their assets and liabilities, however, banks are subject to the possibility of… Expand

Figures from this paper

Challenges for Banking Services in the Knowledge Economy
Abstract In this paper, we have covered many of the roles that banks play in the financial system. Banks act as delegated monitors that ensure that economic agents allocate their resourcesExpand
Are Direct Investments by the Federal Reserve a Good Idea? A Corporate Finance Perspective
Due to the crisis of 2007–2009, financial friction macro models are being used to provide a theoretical foundation for the evaluation of ‘unconventional policy’. In these models, banks take depositsExpand
Who Should Provide 'Liquidity Services'? Systemic Risks, Consumer Protection and Financial Regulation.
By liquidity services, we mean in this paper the whole set of key activities which permit that the final holders of financial claims may switch to cash when needed while nevertheless providing stableExpand
Separation of Commercial and Investment Banks Activities and Its Impact on Economic Growth
Economic growth of a country is depends on its financial system; banks contribute positively towards economic health and stability. Therefore, it is important for a country to have stable bankingExpand
Do Banks Actively Manage Their Liquidity?
We test whether and how U.S. commercial banks actively managed their liquidity positions between 1992 and 2012, prior to the implementation of the Basel III liquidity rules. On average, the data areExpand
SME access to finance in Europe: structural change and the legacy of the crisis
Small and Medium Enterprise (SME) access to credit deteriorated during the financial crisis and credit constraints remain high for some euro area countries. This paper investigates the factors linkedExpand
COVID-19 Implications for Banks: The Case of an Emerging Economy With a Weak Financial System
The COVID-19 pandemic is damaging economies across the world including financial markets and institutions in all possible dimensions. Particularly for banks, the pandemic generates multifacetedExpand
Examining the extent to which the implementation of IFRS has affected the financial and narrative reporting. Evidence from the Greek banking sector.
The financial system consists without hesitation one of the most important determinants of the national economies worldwide. The changes and challenges that the financial institutions face have aExpand
Determinants of credit risk in the Bulgarian and the Romanian banking systems and the role of the Greek crisis
The global financial crisis of 2007-8 and the ensuing manifestation of the Greek debt crisis in the euro area have abruptly ended the credit-fuelled boom in the South East Europe (SEE). The crisisExpand
Determinants of Bank Asset Quality and Profitability
Banking sector plays a key role in the development of an economy. Bank insolvency is a significant problem in many countries all over the world.This study is to perform statistic examining andExpand
...
1
2
3
4
5
...

References

SHOWING 1-10 OF 79 REFERENCES
Systemic risk, interbank relations and liquidity provision by the Central Bank
We model systemic risk in an interbank market. Banks face liquidity needs as consumers are uncertain about where they need to consume. Interbank credit lines allow to cope with these liquidity shocksExpand
Estimating Bilateral Exposures in the German Interbank Market: Is There a Danger of Contagion?
TLDR
It is found that the financial safety net considerably reduces – but does not eliminate – the danger of contagion, and the failure of a single bank could lead to the breakdown of up to 15 % of the banking system in terms of assets. Expand
The Role of Banks in Reducing the Costs of Financial Distress in Japan
This paper explores the idea that financial distress is costly because free-rider problems and information asymmetries make it difficult for firms to renegotiate with their creditors in times ofExpand
Optimal Financial Crises
Empirical evidence suggests that banking panics are a natural outgrowth of the business cycle. In other words panics are not simply the result of "sunspots" or self-fulfilling prophecies. PanicsExpand
Lending relationships in the interbank market
We use a unique dataset to show that relationships are an important determinant of banks' ability to access interbank market liquidity. More precisely, we find that: (i) banks with a larger reserveExpand
The Structure of Bank Relationships, Endogenous Monitoring and Loan Rates
This paper investigates a firm's choice between borrowing from a single bank and from two banks. The focus is on how this decision affects banks' equilibrium monitoring intensities and loan rates.Expand
Universal Banking and the Performance of German Firms
Universal banking is an alternative mechanism to a stock market for risk-sharing, for providing information for guiding investment, and for contesting corporate governance. In Germany, where theExpand
Financial Systems in Europe, the USA, and ASIA
Financial structure is an important determinant of the efficiency and stability of financial systems and the channels through which monetary policy is transmitted. We document the substantialExpand
The simple economics of bank fragility
Banks are linked through the interbank deposit market, participations like syndicated loans and deposit interest rate risk. the similarity in exposures carries the potential for systemic breakdowns.Expand
Banks, Finance and Investment in Germany.
1. Introduction 2. A theoretical framework for analysing the effects of the financial system on economic performance 3. The significance of bank loans in the finance of aggregate investment inExpand
...
1
2
3
4
5
...