The Liquidity Effect in Bank-Based and Market-Based Financial Systems

Johann Scharler

No 2007-18, Economics working papers from Department of Economics, Johannes Kepler University Linz, Austria

Abstract: This paper assesses how the financial system influences the strength of the liquidity effect in a calibrated limited participation model of the monetary transmission mechanism. The model suggests that bankbased systems should be characterized by smaller liquidity effects since monetary injections are spread out over a larger number of firms.

Keywords: limited participation; transmission mechanism; financial systems (search for similar items in EconPapers)
JEL-codes: E32 E52 E58 (search for similar items in EconPapers)
Date: 2007-10
New Economics Papers: this item is included in nep-ban, nep-cba, nep-mac and nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:jku:econwp:2007_18

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