The effect of bank ownership and deposit insurance on monetary policy transmission revisited: the role of precautionary savings
Date
2022
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Article
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12 p.
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Embargo
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Abstract
We generalize the Model of Andries and Billon (2010) by allowing for a general type of consumerâs preferences that allows the presence of prudent behavior. Having precautionary savings changes the model's implication that the existence of public banks diminishes the effectiveness of monetary policy. Indeed, the new setup shows that the existence of public banks may increase or decrease the effect of monetary policy on the level of loan supply depending upon the degree of relative risk aversion
Description
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Citation
Jean P. SepĂșlveda, Marcos Vergara, The effect of bank ownership and deposit insurance on monetary policy transmission revisited: The role of precautionary savings, Finance Research Letters, Volume 50, 2022, 103255, ISSN 1544-6123, https://doi.org/10.1016/j.frl.2022.103255.
Keywords
Public Banks, Monetary Policy, Prudence