This paper aims to investigate the role of capital for banking institutions and provide an empirical analysis on large Italian banks' capital adequacy. The paper is organized as follows. The first section introduces to the issue of the paper. The second section explains why the capital is...

In this paper I review the theory of financial intermediation in order to explain the existence of banks. In the traditional neoclassical models of resource allocation, financial intermediaries play no role. When markets are perfect and complete there is no need for intermediaries. But banks...