For the past hundred years or more, payments have been primarily associated with banking, and banking as we know it today-being the result of many centuries of evolution-features a bundling of (at least) three main lines of business: lending, deposit-taking, and payment services. In the past 15...

What is the essence of non-bank financial intermediation? How does it emerge and interact with intermediation performed by banks? To investigate these questions, we develop a model-based survey: we classify existing models into different intermediation functions á la Merton (1995) to show that...

One of the main concerns associated with central bank digital currencies (CBDC) is the disintermediating effect on the banking sector in general, and the risk of bank runs in times of crisis in particular. This paper examines the implications of an interest-bearing CBDC on banking crises in a...

What role does bond versus bank debt play in the climate transition? We document that fossil fuel firms with greater stranded-asset risk rely less on bond finance and more on bank credit. While bond investors price stranding risk, banks in the syndicated loan market do not. This differential...

The rapid accumulation of public debt raises global concern over its implications for financial markets. This study examines the effect of domestic public debt on financial development in Middle East and North Africa (MENA) countries, a region marked by sharp heterogeneity in institutions, debt...

The financial instruments are subject to market risk, and the degree of risk may differ. Numerous demographic and behavioral factors determine the willingness of retail investors to face market risk. This work examines the direct effect of investors' risk appetite on their risk mitigation...

We empirically test Gabaix and Maggiori (2015)’s prediction that currencies are repriced by the country’s external capital dependence when financial constraints of FX intermediaries change. Using solvency indicators, we develop a novel intermediary constraints index capturing riskbearing...

We leverage supervisory microdata to uncover the role of global banks' risk limits in driving exchange rate dynamics. Consistent with a model of currency intermediation under risk constraints, shocks to dealers' risk limits lead to price and quantity adjustments in the foreign exchange market....

We present a methodology based on quarterly sectoral accounts to build a map of the euro area financial system. The map can be used to visualise existing cross-sectoral interconnections and exposures, to analyse how the main bilateral positions have evolved over time, and to understand how past...

We use project-level information for the largest regional economic development program in German history to study how government subsidies to firms affect credit markets. We identify credit market responses by considering both, bank lending and firm borrowing during 1998-2019. We find that...

The decentralized nature of blockchain markets has given rise to a complex and highly heterogeneous market structure, gaining increasing importance as traditional and decentralized (DeFi) finance become more interconnected. This paper introduces the DeFi intermediation chain and provides...

This paper shows the existence of a central bank trilemma. When a central bank is involved in financial intermediation, either directly through a central bank digital currency (CBDC) or indirectly through other policy instruments, it can only achieve at most two of three objectives: a socially...

This study examines the determinants of financial intermediation costs of banks in ten Emerging Economies (EEs) in the period 2000-2018 using panel data of 1335 banks. Empirically, this study applies the single-stage dealership model and its extensions by introducing new bank and country-level...

Are financial intermediaries-in particular, banks-inherently unstable or fragile, and if so, why? We address this question theoretically by analyzing whether model economies with financial intermediation are more prone than those without it to multiple, cyclic, or stochastic equilibria. We...

How do central bank digital currencies (CBDC) impact the balance sheets of banks and central banks? To tackle this question empirically, we built a constraint optimisation model that allows for individual banks to choose how to respond to outflows of deposits, based on cost considerations and...

One of the main concerns associated with central bank digital currencies (CBDC) is the disintermediating effect on the banking sector in general, and the risk of bank runs in times of crisis in particular. This paper examines the implications of an interest-bearing CBDC on banking crises in a...

We study the interplay of capital and liquidity regulation in a general equilibrium setting by focusing on future funding risks. The model consists of a banking sector with long-term illiquid investment opportunities that need to be financed by short-term debt and by issuing equity. Reliance on...

Using several different datasets obtained from the German Central Bank (Deutsche Bundesbank) and the German Federal Statistical Office, we provide empirical evidence that savings and loan contracts (SLCs) are a macrosocial phenomenon that smooths housing demand by setting countercyclical...

We analyze the performance of marketplace lending using loan cash flow data from the largest platform, Lending Club. We find substantial risk-adjusted performance of about 40 basis points per month for the entire loan portfolio. Other loan portfolios grouped by risk category have similar...

What is the essence of non-bank financial intermediation? How does it emerge and interact with intermediation performed by banks? To investigate these questions, we develop a model-based survey: we classify existing models into different intermediation functions á la Merton (1995) to show that...

What role does bond versus bank debt play in the climate transition? We document that fossil fuel firms with greater stranded-asset risk rely less on bond finance and more on bank credit. While bond investors price stranding risk, banks in the syndicated loan market do not. This differential...

We document that compared to all other investor groups investment funds exhibit a distinctly procyclical behavior when financial-market beliefs about the probability of a euro-related, institutional rare disaster spike. In response to such euro disaster risk shocks, investment funds shed...

This paper analyzes the private production of safe assets and its implications for financial stability. Financial intermediaries (FIs) originate loans, exert hidden effort to improve loan quality, and create safe assets by issuing debt backed by the safe payments from (i) their own loans and...

Using a customized survey and an information-provision experiment, we establish that loan officers' individual subjective expectations about inflation, GDP growth, and policy rates vary substantially within and across bank types and have a sizable causal effect on credit supply decisions....

The study investigates the effects of macro imbalances on the banking sector performance in Kenya from the financial intermediation cost perspective for 2020q4 - 2024q1 period. Employing dynamic panel GMM model, the study finds that inflation pressures above the upper bound target, external debt...

This paper examines the rise of non-bank financial intermediaries (NBFIs) and its implications for financial stability and monetary policy transmission in the Euro Area and the United States. While the U.S. financial system has long been market-based, the Euro Area has experienced a striking...