Abstract
| Original language | English |
|---|---|
| Pages (from-to) | 27-39 |
| Number of pages | 13 |
| Journal | Economic Theory |
| Volume | 8 |
| Issue number | 1 |
| DOIs | |
| Publication status | Published - 1 Jan 1996 |
| Externally published | Yes |
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Banking, incentive constraints, and deposit contracts with nonlinear return. / LIN, Ping.
In: Economic Theory, Vol. 8, No. 1, 01.01.1996, p. 27-39.Research output: Journal Publications › Journal Article (refereed)
TY - JOUR
T1 - Banking, incentive constraints, and deposit contracts with nonlinear return
AU - LIN, Ping
PY - 1996/1/1
Y1 - 1996/1/1
N2 - This paper presents two results regarding banking theory: (1) demand deposit contracts are essential in providing insurance against preferences shocks, as in Diamond and Dybvig (1983), if and only if the incentive compatibility conditions bind at the social optimum; and (2) for additively separable preferences with random discount factors, demand deposit contracts have the realistic feature that the interest rate paid is an increasing function of deposit balance.
AB - This paper presents two results regarding banking theory: (1) demand deposit contracts are essential in providing insurance against preferences shocks, as in Diamond and Dybvig (1983), if and only if the incentive compatibility conditions bind at the social optimum; and (2) for additively separable preferences with random discount factors, demand deposit contracts have the realistic feature that the interest rate paid is an increasing function of deposit balance.
UR - http://commons.ln.edu.hk/sw_master/7181
U2 - 10.1007/BF01212010
DO - 10.1007/BF01212010
M3 - Journal Article (refereed)
VL - 8
SP - 27
EP - 39
JO - Economic Theory
JF - Economic Theory
SN - 0938-2259
IS - 1
ER -