Gu, Chao; Mattesini, Fabrizio; Wright, Randall - In: Review of Economic Studies 80 (2013) 2, pp. 636-662
We develop a model where: (i) banks take deposits and make investments; (ii) their liabilities facilitate third-party transactions. Other models have (i) or (ii), not both, although we argue they are intimately connected: we show that they both emerge from limited commitment. We describe an...