Theories of the Banking Firm: A Review of the Literature.

This paper reviews the theoretical literature on the banking firm. Apart from studies dealing purely with the reasons why banks exist the survey is fairly comprehensive in that it covers the main categories of macroeconomic models of bank behavior. The emphasis is on recent work, which also includes modern, information-based, theories of loan commitments, credit rationing, collateral and the bank-client relationship. Copyright 1996 by Blackwell Publishing Ltd and the Board of Trustees of the Bulletin of Economic Research