Financial Intermediation, markets, and growth

Falko Fecht and Kevin Huang

No 464, 2004 Meeting Papers from Society for Economic Dynamics

Abstract: This paper contributes to the literature comparing the relative performance of financial intermediaries and markets by studying an environment in which a trade-off between risk sharing and growth arises endogenously. Financial intermediaries provide insurance to households against a liquidity shock. Households can also invest directly on a financial market if they pay a cost. In equilibrium, the ability of intermediaries to share risk is constrained by the market. Moreover, intermediaries invest less in the productive technology when they provide more risk-sharing. This creates a trade-off between risk-sharing and growth. We show the mix of intermediaries and market that maximizes welfare depend on parameter values

Keywords: Financial intermediation; financial markets; risk-shring; growth (search for similar items in EconPapers)
JEL-codes: E44 G10 G20 (search for similar items in EconPapers)
Date: 2004
New Economics Papers: this item is included in nep-dge, nep-fin, nep-mac and nep-mfd
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.kc.frb.org/publicat/reswkpap/PDF/FI_M_G.pdf main text (application/pdf)
Our link check indicates that this URL is bad, the error code is: 400 Bad Request

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: https://EconPapers.repec.org/RePEc:red:sed004:464

Access Statistics for this paper

More papers in 2004 Meeting Papers from Society for Economic Dynamics Contact information at EDIRC.
Bibliographic data for series maintained by Christian Zimmermann ().