Loanable funds vs money creation in banking: A benchmark result

Salomon A. Faure and Hans Gersbach

No 587, CFS Working Paper Series from Center for Financial Studies (CFS)

Abstract: We establish a benchmark result for the relationship between the loanablefunds and the money-creation approach to banking. In particular, we show that both processes yield the same allocations when there is no uncertainty and thus no bank default. In such cases, using the much simpler loanablefunds approach as a shortcut does not imply any loss of generality.

Keywords: money creation; bank deposits; capital regulation; monetary policy; loanable funds (search for similar items in EconPapers)
JEL-codes: D50 E4 E5 G21 (search for similar items in EconPapers)
Date: 2017
New Economics Papers: this item is included in nep-ban, nep-cba, nep-mac and nep-mon
References: View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:cfswop:587

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