I explore alternative central bank policies for liquidity provision in a model of payments. I use a mechanism design approach so that agents’ incentives to default are explicit and contingent on the credit policy designed. In the first policy, the central bank invests in costly enforcement and charges an interest rate to recover costs. I show that the second-best solution is not distortionary. ...

I am very pleased to attend the International Conference on “Public Policy for Credit Reporting System: Strengthening Dialogue and Cooperation between the Government and the Private Sector”. Credit reporting system is essential to the modern financial system and plays a significant role in financial and economic development. In the recent 20 years, credit reporting system has received increased...

Monetary policy influences the economy through its effects on credit conditions facing households and firms, for example, the interest rates available on bank deposits and bank loans, and the cost of capital for firms, be it in the form of bank credit, debt issued on the capital market, or equity. While it is convenient for analytical purposes to assume that the monetary authority controls the ...

March 2011 Abstract: We investigate whether the relationship between competition and stability varies across different bank types for Japanese banks during the period 2000-2009. In general we find that stability varies across bank types, in that banks with a regional focus (Regional, Tier 2 Regional, Shinkin and Credit Cooperative banks) are found to be more stable on average than nationwide (C...

The European sovereign debt crisis has impaired many European banks. The distress on the European banks may transmit worldwide, and result in a large-scale knock-on default of financial institutions. This study presents a computer simulation model to analyze the risk of insolvency of banks and the consequent knock-on defaults in a bank credit network. Simulation experiments quantify the worst i...

Using the industrial organization approach to the microeconomics of banking we model a large (Monti-Klein) bank which is risk neutral and faces credit uncertainty in its loan business. The impact of capital adequacy regulation and the effect of changes in risk on deposit and loan rates are analyzed. We then show that capital adequacy regulation induces the bank to behave as if it were risk aver...

With economic development, the credit card business has entered a stage of rapid development. Using quantitative methods of modeling to analyses and predicts the consumers use the credit card behaviors. It is one of hot project in the experimental economics, and it is important for avoiding credit risk. The essay based on a simple NetLogo simulation model to simulate individual consumers and ec...

We use matched, bank-level panel data on Libor submissions and credit default swaps to decompose bank-funding spreads at several maturities into components reflecting counterparty credit risk and funding-market liquidity. To account for the possibility that banks may strategically misreport their funding rates in the Libor survey, we nest our decomposition within a model of the costs and benefi...

Conventional measures of banking sector The traditional indicators utilized for assessing the size, depth and development of a country’s banking (financial) sector are: • The ratio of M2 to GDP • The ratio of private credit to GDP. In particular, both these measures have been used to show the causal effects of financial development on economic growth. However, both measures have some limitation...