Long-term banking relationships in general equilibrium

Michael S. Gibson
Additional contact information
Michael S. Gibson: https://www.federalreserve.gov/econres/michael-s-gibson.htm

No 452, International Finance Discussion Papers from Board of Governors of the Federal Reserve System (U.S.)

Abstract: I examine the relationship between a financial intermediary (\"bank\") and a borrowing firm in a three-period overlapping generations model. The model can accommodate two financing arrangements between the bank and the firm: one requires commitment to a long-term contract, the other does not. Which arrangement is chosen depends on whether such a commitment can be credibly made. After defining the two arrangements, I compare their features with real-world financial dealings. Once the form of the long-term relationship between the bank and the firm is set, investment and output of the economy can be determined. Disruptions in financial markets can affect real investment and output by disrupting established long-term relationships.

Keywords: Banking; structure (search for similar items in EconPapers)
Date: 1993
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.federalreserve.gov/pubs/ifdp/1993/452/default.htm (text/html)
http://www.federalreserve.gov/pubs/ifdp/1993/452/ifdp452.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgif:452

Access Statistics for this paper

More papers in International Finance Discussion Papers from Board of Governors of the Federal Reserve System (U.S.) Contact information at EDIRC.
Bibliographic data for series maintained by Ryan Wolfslayer ; Keisha Fournillier ().