Chiu, Jonathan; Davoodalhosseini, Seyed Mohammadreza; … - 2020 - Last updated: December 10, 2020
We use a simple model to study whether private payment systems based on bank deposits can provide the optimal level of … ante and ex post monitoring. Safe payment instruments issued by a narrow bank can also be used as a back-up payment system … when the risky bank fails. Private adoption of safe payment instruments is generally not socially optimal when buyers do …