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A structural model of central bank operations and bank intermediation

Ulrich Bindseil and Juliusz Jabłecki (jjablecki@wne.uw.edu.pl)

No 1312, Working Paper Series from European Central Bank

Abstract: The banking system is modelled in a closed system of financial accounts, whereby the equilibrium volume of bank intermediation between households and corporates reflects structural parameters such as household preferences, comparative cost structures of heterogeneous banks, loan demand of corporates, and the difference between the borrowing rate and the deposit facility rate of the central bank. The model also allows understanding the link between this difference (the width of the central bank standing facilities corridor) and the stance of monetary policy, and how this link changes during a financial crisis. It is shown how the narrowing of the standing facilities corridor can make more accommodating the stance of monetary policy in a financial crisis. JEL Classification: E43, E44, G21

Keywords: bank intermediation; central bank crisis measures; central bank operations; standing facilities (search for similar items in EconPapers)
Date: 2011-03
New Economics Papers: this item is included in nep-ban, nep-cba and nep-mon
Note: 327704
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbwps:20111312

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