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Rationing in a Theory of the Banking Firm

  • Timothy M. Devinney
Book

Part of the Studies in Contemporary Economics book series (CONTEMPORARY)

Table of contents

  1. Front Matter
    Pages I-VI
  2. Timothy M. Devinney
    Pages 1-2
  3. Timothy M. Devinney
    Pages 3-9
  4. Timothy M. Devinney
    Pages 10-63
  5. Timothy M. Devinney
    Pages 64-80
  6. Timothy M. Devinney
    Pages 81-90
  7. Back Matter
    Pages 91-102

About this book

Introduction

The existence of non-price rationing in credit markets is a subj ect, not only of paramount importance, but of considerable controversy, which is ultimately linked with our understanding, or lack thereof, of the basic nature of the banking firm. A recognition of this phenomenon is critical to the understanding of the banking firm in its major role as a financial intermediary. The banking firm serves as an intermediary in two important spheres, between borrower and lender, and between spenders and the monetary authorities. The basic economic formulation of borrower-lender behavior, the simple Fisherian consumption loan model, while beautiful in its simplicity, fail s to acknowledge any role for a non-neutral financial intermediary. The bank, in its second intermediary role, leads one to question the assumption of both neoclassical and Keynsian monetary theories that monetary changes are diffused across the economy (the proverbial monetary helicopter). Monetary policy effects on spending and investment will clearly be biased by the policies of the banks. The major focus of the present work is the development of a theory of credit rationing based upon the existence of risk reducing information technologies. Implicit in the analysis is a discussion of the role of the banking firm as something more than a tr·aditional financial intermediary. The present analysis will focus on the bank as an intermediary between borrower and lender. It will be shown that in .

Keywords

banking development economy equilibrium general equilibrium information investment monetary policy probability research science and technology

Authors and affiliations

  • Timothy M. Devinney
    • 1
  1. 1.Owen Graduate School of ManagementVanderbilt UniversityNashvilleUSA

Bibliographic information

  • DOI https://doi.org/10.1007/978-3-642-82649-8
  • Copyright Information Springer-Verlag Berlin Heidelberg 1986
  • Publisher Name Springer, Berlin, Heidelberg
  • eBook Packages Springer Book Archive
  • Print ISBN 978-3-540-16052-6
  • Online ISBN 978-3-642-82649-8
  • Series Print ISSN 1431-8806
  • Buy this book on publisher's site
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