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SUMMARY:On the special role of deposits for long-term lending.
DTSTART:20180329T120000
DTEND:20180329T130000
DTSTAMP:20260920T161031Z
UID:d2d2194826a93486142b8db3b66e5b499f6eb019ebc6093cb4dc2999
CATEGORIES:Conferences - Seminars
DESCRIPTION:Elena PERAZZI (UniL)\nI build a general equilibrium model to s
 how that deposits are a special form of financing\, that makes banks more 
 suitable to extend long-term loans when confronted with the risks of monet
 ary policy.\nIn the model\, banks borrow short-term and lend long-term\, a
 re subject to a minimum equity requirement similar to Basel II\, and face 
 a financial friction: they cannot raise equity on the market. Consistently
  with the "bank-capital channel" of monetary policy\, when the risk-free r
 ate increases\, the value of the banks' assets and equity are eroded\, and
  the banks deleverage by cutting their lending.\nI show that\, thanks to a
  combination of banks' market power in the deposit market and of the  mon
 ey-like properties of deposits\, the profits on deposits are strongly coun
 tercyclical\, and reduce by about one third the contraction of lending at 
 high interest rates due to the bank capital channel.\nAmid current proposa
 ls for narrow banking\, this effect provides a rationale for the coexisten
 ce of lending and deposit-taking activities in current commercial banks.\n
  
LOCATION:UNIL\, Extranef\, room 118 https://planete.unil.ch/plan/?local=EX
 T-118.1
STATUS:CONFIRMED
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