An Adverse Selection Model of Bank Asset and Liability Management with Implications for the Transmission of Monetary Policy

Jeremy Stein

No 5217, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper develops a model of bank asset and liability management, based on the idea that information problems make it difficult for banks to raise funds with instruments other than insured deposits. The model can be used to address the question of how monetary policy works. One effect it captures is that when the Fed reduces reserves, this tightens banks' financing constraints and thereby leads to a cutback in bank lending -- this is the 'bank lending channel' in action. However, in addition to providing a specific set of microfoundations for the lending channel, the model also yields a novel account of how monetary policy affects bond-market interest rates.

Date: 1995-08
Note: CF EFG ME
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (48)

Published as RAND Journal of Economics, Vol. 29, no. 3 (Autumn 1998), pp. 466-486.

Downloads: (external link)
http://www.nber.org/papers/w5217.pdf (application/pdf)

Related works:
Journal Article: An Adverse-Selection Model of Bank Asset and Liability Management with Implications for the Transmission of Monetary Policy (1998)
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:nbr:nberwo:5217

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w5217

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().