Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/127254 
Year of Publication: 
2006
Series/Report no.: 
Discussion Paper Series No. 430
Publisher: 
University of Heidelberg, Department of Economics, Heidelberg
Abstract: 
Financial intermediaries may increase economic efficiency through intertemporal risk smoothing. However without an adequate regulation, intermediation may fail to do this. This paper studies the effects of a production shock in a closed economy and compares abilities of market-based and bank-based financial systems in processing the shock. Unregulated banking system may collapse in absence of a proper regulation. The paper studies several types of regulatory interventions, which may improve the performance of the banking system.
Subjects: 
Financial intermediation
overlapping generations
general equilibrium
intertemporal smoothing
JEL: 
D50
G21
G28
E44
E53
O16
Document Type: 
Working Paper

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