A paper presented at the June 2000 conference quot;Specialization, Diversification, and the Structure of the Financial System: The Impact of Technological Change and Regulatory Reform,quot; sponsored by the Federal Reserve Bank of New York

This paper derives the optimal size of the financial sector using a general equilibrium framework that is an extension of Holmstrom and Tirole's 1997 paper. We show that the financial sector has a unique optimal size relative to the size of the economy as a whole. Creating and maintaining this...

This paper surveys the theory of banking regulation from the general perspective of regulatory theory. Starting by considering the different justifications of financial intermediation, we proceed to identify the market failures that make banking regulation necessary. We then turn to examine how...

[...]The final force of change is the continual evolution of thedelivery channels through which financial services are offered.This has occurred in many ways and in several stages. First, theuse of postal services substituted for physical market presence;this was followed by increased use of...