On the obsolescence of commercial banking
Article Abstract:
Geoffrey Miller argues that bank runs are more likely when banks act as financial intermediaries and payment transactors. The two functions can be separated, and commercial banks have only continued to operate because of a lack of financial assets for narrow banks to invest in, assets that are liquid, risk-free and short-term. This has changed, but it is not clear whether, as Miller argues, narrow banks will or should develop, nor whether they will be efficient.
Publication Name: Journal of Institutional & Theoretical Economics
Subject: Economics
ISSN: 0932-4569
Year: 1998
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Mutual funds as an alternative banking system
Article Abstract:
The banking system has certain drawbacks such as the cost of the banking safety net, and the impact of regulations on efficiency. The safety net is geared to preventing panics and runs on banks, and is partly funded by taxpayers. It is worth exploring alternatives that do not cost so much, and which do not lead to inefficiencies from tight regulation. Money market funds are a possible alternative to the existing payments transfer and transaction account system.
Publication Name: Journal of Institutional & Theoretical Economics
Subject: Economics
ISSN: 0932-4569
Year: 1998
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