Economics at your fingertips  

Banks and markets: substitutes, complements, or both?

Mitchell Berlin

Business Review, 2012, issue Q2, 1-10

Abstract: In traditional banking arrangements, households hold their savings in the form of deposits at the bank, which makes loans to both firms and households and holds these loans to maturity. But in the United States, and to a lesser extent in other developed countries, markets have increasingly taken over the roles traditionally played by banks. The shift of financing activity from banks to financial markets, as well as their continued coexistence, raises a number of questions. In this article, Mitchell Berlin discusses some of these questions, such as: What factors determine the relative importance of banks and markets in a financial system in which the two types of finance coexist? Why do so many borrowers continue to use a mixture of bank loans and bonds? And perhaps most important: How does the mix of banks and market finance affect the real economy? That is, how much households save, how firms invest, and how fast the economy grows.

Keywords: Financial services industry; Markets; Banks and banking (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed

Downloads: (external link) ... plements-or-both.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 500 Can't connect to ( [302 Redirect]-->

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:

Ordering information: This journal article can be ordered from
http://www.phil.frb. ... airs/pubs/index.html

Access Statistics for this article

Business Review is currently edited by Becca Sells

More articles in Business Review from Federal Reserve Bank of Philadelphia Contact information at EDIRC.
Bibliographic data for series maintained by Beth Paul ().

Page updated 2019-04-22
Handle: RePEc:fip:fedpbr:y:2012:i:q2:p:1-10