The neoclassical approach focuses its attention on the prudence of individual banks. In its objective of achieving allocative efficiency, it seeks to prevent market failures caused by the operations of the banks. In this light, it is contended that China should further its market reforms in the...

The frequency with which firms adjust output prices helps explain persistent differences in capital structure across firms. Unconditionally, the most exible-price firms have a 19% higher long-term leverage ratio than the most sticky-price firms, controlling for known determinants of capital...

The paper extends a standard two-country international real business cycle model to include financial intermediation by banks of loans and government bonds. Taking in household deposits from home and abroad, the loans are produced by the bank in a Cobb-Douglas production approach such that a...

Countercyclical bank capital requirements have emerged as a popular regulatory tool to help smooth financial cycles. The idea is to reduce capital requirements when exogenous shocks cause aggregate bank capital to decrease so that regulation does not needlessly constrain banks' supply of credit....

This paper focuses on the different balance sheet management behavior of private banks and worker households, when assets are traded in the market. The authors take into consideration the securitization process, through which mortgage loans to households are converted into tradable securities...

Given the background of financial disintermediation and interest rate marketization, the assets of China’s commercial banks can be divided into traditional credit assets, whose rates of return are controlled by the supervision department, and financial assets, whose rates of return fluctuate...

We extend the Carlin and Soskice (2005) 3-equation New Keynesian model by introducing a commercial bank that intermediates between the central bank and borrowers in the non-bank private sector. Commercial bank interest rate setting is explicitly modelled, and the implications for stabilization...

The global financial crisis shattered the conventional wisdom about how financial markets work and how to regulate them. Authorities intervened to stop the panic-short-term pragmatism that spoke volumes about the robustness of mainstream economics. However, their very success in taming the...

The global financial crisis shattered the conventional wisdom about how financial markets work and how to regulate them. Authorities intervened to stop the panic — short term pragmatism that spoke volumes about the robustness of mainstream economics. However, their very success in taming the...