The Feedback between Real and Credit Markets
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Show full item recordcomunitat-uji-handle:10234/9
comunitat-uji-handle2:10234/29747
comunitat-uji-handle3:10234/162746
comunitat-uji-handle4:
TESISMetadata
Title
The Feedback between Real and Credit MarketsAuthor (s)
Director
Tedeschi, GabrieleDoctoral Studies
Programa de Doctorat en Economia i EmpresaResponsible entity
Universitat Jaume I. Escola de DoctoratDate of defense
2019-03-14Publisher
Universitat Jaume ISubject
Pages
117 p.;Abstract
The main purpose of this thesis is to extend the theoretical knowledge on the
relationship between the financial and the real sectors. Speciffically, we investigate how the allocation of capital affects the dynamics ... [+]
The main purpose of this thesis is to extend the theoretical knowledge on the
relationship between the financial and the real sectors. Speciffically, we investigate how the allocation of capital affects the dynamics of macroeconomic cycles and the long-term growth rate. Indeed, given the position of financial
intermediaries between the demand and the supply of loanable funds, banks
can change the market equilibrium influencing the choices of households and firms. Moreover, also the competitive pressure arising from incumbent institutions can play a major role in the definition of the final outcome.
First, we develop a computational agent-based model, where the channeling of funds from savers to investors occurring through intermediaries is affected by information frictions. Since banks compete in both the deposit and the loan markets, the whole dynamics is driven by endogenous fluctuations in the size of the intermediaries balance sheet. Accordingly, the introduction of an interbank market, reducing the pressure on the liability side of banks' balance sheets, improves the performance of the system. However,
the result depends on the topology of the network. Indeed, the functioning
of a highly centralized financial system relies on the current state of the hub
and vice-versa.
Lastly, we develop a simple general equilibrium model to study the effects
of financialization on aggregate growth and systemic risk. The main driver
of this process is the bargaining power of intermediaries. Indeed, financial
institutions, by absorbing a larger quota of income from entrepreneurs, can
reduce the incentive for new firms to enter the market. As a result, both the
long-term potential growth rate and the overall stability of the system can
be negatively affected by an overdeveloped financial sector. [-]
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info:eu-repo/semantics/openAccess
info:eu-repo/semantics/openAccess