We study the interactions between the two roles of commercial banks as payment intermediaries and credit intermediaries. Deposits serve as a medium of exchange, and depositors with liquidity shocks may pay with deposits for real consumptions without withdrawing cash from the banking system....

Introducing shadow banks into the economy lowers the money supply measured as the sum of cash and deposits, while the amount of payment liquidity does not decrease as long as the liabilities of shadow banks remain fully liquid. At the same time, the total amount of credit available to firms...

We introduce banks to the fiscal theory of price level to study the effectiveness of open market operations in correcting the distortions caused by an improper tax rate. A rise in the tax rate increases the real purchasing power of payment liquidity for short-term consumption, but reduces firms'...

Interconnected banks are prone to the propagation of negative shocks. In a network with banks borrowing from each other using collateral, the risk of financial contagion leads to the emergence of multiple equilibria, featuring different sizes of loans and collateral haircuts. Safe assets are...

This paper uses a partial equilibrium framework to prove that in the short-term, network hashrate shock affects average miner income through both transaction fee income and block reward income.Using Bitcoin blockchain data, we show that miner average transaction fee income goes in the opposite...

The controlling shareholder of a firm may suffer from its control of the firm due to unfavorable market reactions associated with concerns on his private benefit extraction. Thus, the controlling shareholder has an incentive to build a good governance mechanism as a commitment device to...

Does government control reduce firm value? A strong government control helps the government to extract social or political benefits from a state-controlled firm, thus decreases its value; but it also makes it more effective for the government to monitor the firm management, thus increases its...

This paper uses a partial equilibrium framework to analyze PoW blockchain network and proves that in the short-term, network hashrate shock affects average miner income through both transaction fee income and block reward income. Using Bitcoin blockchain data, we show that miner average...