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We propose a theory of financial intermediaries operating in markets influenced by investor sentiment. In our model …. Banks maximize profits, and there are no conflicts of interest between bank shareholders and creditors. The theory explains …
Persistent link: https://www.econbiz.de/10012463705
We present a model of shadow banking in which financial intermediaries originate and trade loans, assemble these loans into diversified portfolios, and then finance these portfolios externally with riskless debt. In this model: i) outside investor wealth drives the demand for riskless debt and...
Persistent link: https://www.econbiz.de/10012461542