Banking and Insurance / Joseph G. Haubrich, Robert G. King.

Format:

Book

Author/Creator:

Haubrich, Joseph G.

Contributor:

National Bureau of Economic Research.

King, Robert G.

Series:

Working Paper Series (National Bureau of Economic Research) no. w1312.

NBER working paper series no. w1312

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1984.

Summary:

This paper studies the economic role of financial institutions in economies where agents' incomes are subject to privately observable, idiosyncratic random events. The information structure precludes conventional insurance arrangements. However, a financial institution -- perhaps best viewed as a savings bank -- can provide partial insurance by generating a time pattern of deposit returns that redistributes wealth from agents with high incomes to those with low incomes, resulting in a level of expected utility higher than that achievable in simple security markets. Insurance is incomplete because the bank faces a tradeoff between provision of insurance and maintenance of private incentives.

Notes:

Print version record

March 1984.