RT Journal Article
T1 Banks increase welfare
A1 Samartín, Margarita
AB This paper examines the relative degrees of risk sharing provided by demand deposit contracts and equity contracts. It is shown that in a framework in which individuals have smooth preferences and there exists some type of aggregate uncertainty (interest rate risk), the allocations obtained with a financial intermediary allow in general for greater risk sharing than those achieved in an equity economy. However, the interest rate is essential in order to determine the superiority of demand deposit contracts over equity contracts. The results of the paper contradict the ones obtained by Jacklin [1987] and Hellwig [1994], where demand deposit and equity contracts are always equivalent risk sharing instruments.
PB Wiley-Blackwell
SN 0963-8008
YR 2001
FD 2001-12
LK https://hdl.handle.net/10016/7603
UL https://hdl.handle.net/10016/7603
LA eng
DS e-Archivo
RD 1 sept. 2024