The Roles of Banks in Financial Systems

@article{Allen2019TheRO,
  title={The Roles of Banks in Financial Systems},
  author={Franklin Allen and Elena Carletti},
  journal={The Oxford Handbook of Banking},
  year={2019}
}
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… 

Figures from this paper

Financial Structure, Economic Growth and Development

Financial intermediaries and markets can alleviate market frictions through producing information and risk sharing in different ways. In practice, the structure of financial systems can be bank-based

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 stable

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 linked

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 banking

The Informational Role of Ownership Networks in Bank Lending

We study the informational role of interfirm ownership networks in loan monitoring. Using comprehensive data on monthly internal rating changes of individual corporate loans in China, we directly

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 and

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 a

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 multifaceted

COVID-19 implications for banks: evidence from an emerging economy

TLDR
Bangladesh is utilized as a case study of an emerging economy and the possible impacts of the COVID-19 pandemic on the country’s banking sector are examined, suggesting that all banks are likely to see a fall in risk-weighted asset values, capital adequacy ratios, and interest income at the individual bank and sectoral levels, however, estimates show that larger banks are relatively more vulnerable.
...

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 shocks

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 reserve

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.

The simple economics of bank fragility

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. Panics

The Main Bank System and Corporate Investment: An Empirical Reassessment

This paper examines whether the sensitivity of corporate investment to internal funds depends on the firm's access to a main bank, using the sample of Japanese manufacturing firms constructed by

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 in

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.
...