This dissertation consists of three essays in financial intermediation. The first essay develops a theory of deposits as a safer means of payment (bank notes or checks) in competing with money (cash). It turns out that banks can lend out the money from deposits for a charge, and this supply of...

This paper examines the effect of FDI on job creation in the Chinese manufacturing sector. As one of the world's largest recipients of FDI, China has arguably benefited from foreign multinational enterprises in various respects. However, one of the main challenges for China, and other developing...

FDI can be an important channel for developing countries' ability to get access to new technology. The impact of FDI on domestically-owned firms' technology development is less examined but it is frequently argued that technology externalities or demonstration effects could have a positive...

parameters optimal; for other parameters, strictly positive rates (inflation above the Friedman Rule) are optimal.

FDI can be an important channel for developing countries’ ability to get access to new technology. The impact of FDI on domestically-owned firms’ technology development is less examined but it is frequently argued that technology externalities or demonstration effects could have a positive...

This paper examines the effect of FDI on job creation in the Chinese manufacturing sector. As one of the world’s largest recipients of FDI, China has arguably benefited from foreign multinational enterprises in various respects. However, one of the main challenges for China, and other...

We study the interactions between the two roles of commercial banks as payment intermediaries and credit intermediaries. Deposits serve as a medium of exchange, and depositors with liquidity shocks may pay with deposits for real consumptions without withdrawing cash from the banking system....

Introducing shadow banks into the economy lowers the money supply measured as the sum of cash and deposits, while the amount of payment liquidity does not decrease as long as the liabilities of shadow banks remain fully liquid. At the same time, the total amount of credit available to firms...

We introduce banks to the fiscal theory of price level to study the effectiveness of open market operations in correcting the distortions caused by an improper tax rate. A rise in the tax rate increases the real purchasing power of payment liquidity for short-term consumption, but reduces firms'...