lending

February 28, 2018

Socially Useless? The Crucial Contribution of Finance to Economic Life

Financial firms serve many useful functions which individuals and households could scarcely undertake on their own. These functions include maturity transformation, matching lenders and borrowers at low cost, facilitating the transfer of risk and consumption across time and between people, monitoring, and diversification of investments.
February 16, 2018

Financial Stability Without Central Banks

A ‘free’ banking system without a central bank provides incentives for banks to act with restraint. Their lending policies are, in effect, tied to each other. If one over-reaches, it will be pulled back as others present notes to and demand reserves from the bank that is lending recklessly.
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