Asymmetric Information and Optimal Bank Reserves.
One traditional argument in favor of bank reserve requirements holds that since a b ank and its depositors are asymmetrically informed as to the bank's reserve position and its portfolio, the bank will hold too few reserves and too risky a port folio. This being the case, presumably a central banking authority is equipped t o impose and to monitor a minimal reserve requirement yielding a Pareto superior outcome. This paper analyzes this position in the context of a formalmodel and shows that at least for some parameters of the model there is such a case for a minimal reserve requirement. Copyright 1987 by Ohio State University Press.
Year of publication: |
1987
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Authors: | Cothren, Richard |
Published in: |
Journal of Money, Credit and Banking. - Blackwell Publishing. - Vol. 19.1987, 1, p. 68-77
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Publisher: |
Blackwell Publishing |
Saved in:
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