The Soundness of Financial Intermediaries

Financial Intermediaries and Markets

A complex financial system comprises both financial markets and financial intermediaries. We distinguish financial intermediaries according to whether they issue complete contingent contracts or incomplete contracts. Intermediaries such as banks that issue incomplete contracts, e.g., demand deposits, are subject to runs, but this does not imply a market failure. A sophisticated financial system...

Emerging Markets and Financial Intermediaries

Over the last fifteen years, emerging economies have experienced abrupt changes in bond spreads and large movements in capital flows. We propose a simple general equilibrium model where international investors hire fund managers to invest their capital either in the bonds of an emerging economy or in a riskless asset. We model the emerging economy as a small-open economy subject to an aggregate...

Risk, Leverage, and Regulation of Financial Intermediaries

This paper presents a model on the leverage of …nancial intermediaries, where debt are held by risk averse agents and equity by the risk neutral. The paper shows that in an unregulated competitive market, …nancial intermediaries choose to be leveraged over the social best level. This is because the leverage of one intermediary imposes a negative externality upon others by reducing their pro…t m...

New Special Study of the Securities Markets: Financial Intermediaries

Regional Financial Soundness and R&D Activities

In order to explore the impact of financial factors on the real economy, many researchers are analyzing the relationship between finance and real economic activity using new theories and approaches. This paper focuses on the relationship between financial soundness and corporate R&D activities on a regional scale. By measuring regional financial performance using data series including periods o...