Banking and commerce: a liquidity approach
Joseph Haubrich () and
No 9907, Working Papers (Old Series) from Federal Reserve Bank of Cleveland
This paper looks at the advantages and disadvantages of mixing banking and commerce, using the \\"liquidity\\" approach to financial intermediation. Adding a commercial firm makes it easier for a bank to dispose of assets seized in a loan default. This \\"internal market\\" increases the liquidity of such assets and improves the bank's ability to perform financial intermediation. More generally, owning a commercial firm may act either as a substitute or a complement to commercial lending. In some cases, a bank will voluntarily refrain from making loans, choosing to become a nonbank bank in an unregulated environment.
Keywords: Bank liquidity; Nonbank financial institutions (search for similar items in EconPapers)
Date: 1999, Revised 1999
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Journal Article: Banking and commerce: A liquidity approach (2005)
Working Paper: Banking and commerce: a liquidity approach (1999)
Working Paper: Banking and Commerce: A Liquidity Approach (1999)
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