A Law and Finance Approach
Chapter 2: The wages of intermediation
What the bank does as a financial intermediary determines its funding dynamics. These activities include extending credit outright, providing payment services, and promising to provide funds in the future at the election of the borrower. This chapter analyzes how funding these activities leaves the bank’s asset-liability structure vulnerable to financial instability, in particular in its short-term liquidity position. The bank’s treasury function can profitably manage these financial risks because of its unrivaled access to liability funding markets. Also, the federal government stands ready to supplement these private sources with a variety of specialized funds available only to banks.
You are not authenticated to view the full text of this chapter or article.
Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.
Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.
Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.