Bolton, Patrick; Li, Ye; Wang, Neng; Yang, Jinqiang - 2020
We propose a dynamic theory of banking where deposits play the role of productive capital as in the classical Q …-theory of investment for non-financial firms. A key conceptual innovation of our theory is that the stock of deposits cannot be …. Deposits create value for the bank except when it is close to hitting the leverage restrictions, because sudden deposit inflows …