This paper provides a unified framework for endogenizing two distinct organizational structures of financial intermediation. In one structure, called Bank, the intermediary is financed by issuing debt contracts to investors, and thus resembles commercial banks. In the other structure, called...

This paper provides a unified framework for endogenizing two distinct organizational structures of financial intermediation. In one structure, called Bank, the intermediary is financed by issuing debt contracts to investors, and thus resembles commercial banks. In the other structure, called...

Banks are special in that their liabilities are widely accepted as a means of payment, thereby often needed by real sectors to obtain resources. This paper studies this interaction between the banking sector and real sectors on competitive markets and the policy response of the central bank to...

This paper considers money creation by banks and central banking in a model where a means of payment is issued by both the central bank and banks, and the private issuance is endogenous in competitive equilibrium. The economy lasts for two dates, but the central bank gets its purely nominal...

Bank credit, as a means of payment, circulates in a circuit: It is first originated from the banking system, then used for trading, and eventually deposited back to the banking system. This circulation creates an interbank network that has been little studied. I characterize how this interbank...

This paper studies non-neutrality of monetary policy incorporating three facts: The majority of media of exchange is not fiat money but bank liability; fiat money is largely used by banks to meet liquidity demand; and banks extensively use government bonds for liquidity management. It finds that...

Traditionally banks have used securitization for expanding credit and thus their profitability. It has been well documented that, at least before the 2008 crisis, many banks were keeping a high proportion of the securities that they created on their own balance-sheets. Those securities retained...