“Ideas” have always been a core trait of the Bank. Indeed if the Bank was simply a financial intermediary it would barely need a tenth of its staff. The money was seen as the lubricant to move the main product – ideas of what to do, how to do it, who should do it and for whom. However, in its early decades the importance of ideas was implicit. The source of ideas was the knowledge embedded in i...

This paper presents an integrated theory of money and dynamic credit. I study financial intermediation when both the intermediary and individuals have private information. I show that money is essential in solving the two-sided incentive problems under the dynamic credit arrangement. First, requiring settlement with money can induce market trades that generate information-revealing prices to di...

We study the impact of financial innovations on real investment decisions within the framework of an incomplete market economy comprised of firms, investors, and an intermediary. The firms face unique investment opportunities that arise in their business operations and can be undertaken at given reservation prices. The cash flows thus generated are not spanned by the securities traded in the fi...

This chapter addresses the first research question and will be a steppingstone to the fundamental analysis of Chapter 7. Essentially, this chapter is an exploratory analysis. That is why more of a statistical descriptive analysis is used in order to explain the profile of BPR as a financial provider under circumstances of complex and intense competition and abrupt environmental changes during t...

This study investigates monetary and financial shocks on macroeconomic variables, focusing on the role of banking intervention. For this purpose, a Keynesian dynamic stochastic general equilibrium (DSGE) model is designed for Iran’s economy that involves financial and banking sectors. The results of the model simulation show that the financial accelerator theory works in the Iranian economy. Al...

We present a model of financial market liquidity provided by financially constrained intermediaries. We show that market liquidity increases with the level of intermediary capital. We also characterize conditions under which intermediaries play a stabilizing or destabilizing role in markets. Finally, we sketch a number of areas, including welfare and public policy, on which the model can shed l...

According to the mechanism of financial development, FDI and economic growth, this paper uses individual fixed effects model mediation effect 31 provinces cities in China from 2000 2019 conduct empirical tests. The research results show that a national perspective, improvement China’s development level can significantly promote development. Secondly, perspective regional samples, eastern has mo...

The He and Krishnamurthy models imply that the financial intermediary sector – measured broadly, and not just focused for example on hedge funds – has leverage that rises during crisis. The prediction is due to a mix of general equilibrium and corporate finance arguments. First, in the model, in general equilibrium the intermediary sector must retains the bulk of risk exposure from intermediate...

This paper classifies different types of financial architecture in an economy with investment complementarities and imperfect information. Classification is done according to the roles played by direct and intermediated finance. When the return on assets traded in financial markets is more volatile than the returns offered by intermediaries, financial intermediation improves the coordination am...