Financial Intermediation Versus Stock Markets in a Dynamic Intertemporal Model

Sudipto Bhattacharya, Paolo Fulghieri and Riccardo Rovelli

Journal of Institutional and Theoretical Economics (JITE), 1998, vol. 154, issue 1, 291-

Abstract: We consider the transitions among intragenerational and alternative intergenerational financing and liquidity risk sharing mechanisms, in an overlapping generations model with endogenous levels of long-lived investments. The existence and characterization of a self-sustaining mechanism, stable across generations, is established. The long-run equilibrium outcome, in a proposal game across generations, is shown to depend on the risk aversion and propensity for early liquidity needs of the agents.

JEL-codes: D23 G10 G20 (search for similar items in EconPapers)
Date: 1998
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Working Paper: Financial Intermediation Versus Stock Markets in a Dynamic Intertemporal Model (1997)
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