Money, Financial Intermediation and Governance

Money, Financial Intermediation and Governance

Dino Falaschetti and Michael J. Orlando

Dino Falaschetti and Michael Orlando unify the treatment of the many deeply related topics in money and banking in this wide-ranging book. By continually building on the assumption that economic actors are maximizers, they explain how monetary and financial services, as well as related governance mechanisms, influence economic performance. In this manner, Money, Financial Intermediation and Governance not only lets readers make sense of today’s monetary authorities and financial markets, it lets them see through superficial complexities to the fundamental influences that will shape those organizations for years to come.


Dino Falaschetti and Michael J. Orlando

Subjects: business and management, corporate governance, economics and finance, corporate governance, financial economics and regulation, money and banking


Whether in a classroom or other setting, our readers might enjoy a better understanding of money, financial intermediation and governance by contemplating the following questions. PART I 11. True, false, explain: We must, either explicitly or implicitly, employ ‘models’ to understand social phenomena. 12. True, false, explain: Even if individuals do not consciously ‘maximize,’ assuming that they do can facilitate insight to how economies behave. 13. Under what conditions is the assumption of maximizing-behavior reasonable? Do the markets in which monetary and financial services trade satisfy this condition? 14. A ‘good’ model builds on self-evident truths to generate accurate predictions: A. True, false, explain: Models that logically derive from the axiom of maximizing-behavior can be ‘good.’ B. Please describe a model built on the axiom of maximizingbehavior that predicts well. C. Did the decision-maker in your example (human or non-human) explicitly engage in maximizing-behavior? D. Even if decision-makers do not explicitly engage in maximizingbehavior, why can we gain insight from models that assume maximizing-behavior? 15. Congratulations! Congress just approved your nomination to the Federal Reserve Board of Governors (that is, the United States’ monetary authority). As a Board member, you will be presented with numerous models of the economy. How will you evaluate these competing models’ merits? 16. Why does the axiom of maximizing-behavior imply that the marginal cost of one’s actions equals the marginal benefit? 17. ‘Intellectual honesty’ has been characterized as requiring the precise specification of ‘conditions under which one is willing to give up...

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