Samartín, Margarita; Dwyer, Gerald - Society for Economic Dynamics - SED - 2004
reserves. The theoretical literature can be broadly divided into three strands: liquidity; asymmetric information; and … regulatory restriction. One strand of the literature argues that banks offer to pay par on demand in order to provide liquidity … on demand. If the explanation based on customers' demand for liquidity is correct, payment of deposits at par will be …