 Response to “A note on ‘Rethinking liquidity creation: Banks, shadow banks and the elasticity of finance’”Yeva Nersisyan and Flavia Dantas Journal of Post Keynesian Economics, 2018, vol. 41, issue 4, 654-658 Abstract: In an article published in vol. 40, issue 3 of the Journal of Post Keynesian Economics, we challenged the post Keynesian view that nonbank financial institutions (NBFIs) are intermediaries between savers and borrowers. We argued that the “intermediary” framework is not an appropriate description of what financial institutions do. Instead, we proposed to broaden the endogenous money theory by incorporating nonbank financial institutions into it using the hierarchy of money. Our article generated a response by Bouguelli in which they argue that the traditional post Keynesian framework, with its clear-cut distinction between banks and NBFIs is better suited for understanding the different roles of these institutions and their “symbiotic relationship.” In this rejoinder, we respond to the critique of Bouguelli and clarify our position. We demonstrate that banks and nonbanks are similar in how they issue liabilities to finance positions in assets and settle on a netted basis using the liabilities of another entity higher up in the hierarchy. Moreover, we argue that NBFIs’ reliance on banks is better captured by the framework of leveraging rather than that of intermediation. Date: 2018 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:mes:postke:v:41:y:2018:i:4:p:654-658 Ordering information: This journal article can be ordered from DOI: 10.1080/01603477.2018.1494506 Access Statistics for this article More articles in Journal of Post Keynesian Economics from Taylor & Francis Journals |
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