- Copyright Page
- List of Figures
- List of Tables
- List of Abbreviations
- List of Contributors
- Banking: A Decade on from the Global Financial Crisis
- The Roles of Banks in Financial Systems
- Commercial Banking and Shadow Banking: The Accelerating Integration of Banks and Markets and its Implications for Regulation
- Corporate Complexity and Systemic Risk: A Progress Report
- Corporate Governance and Culture in Banking
- Private Information and Risk Management in Banking
- Creation and Regulation of Bank Liquidity
- The Performance of Financial Institutions Modeling, Evidence, and some Policy Implications
- Technological Change and Financial Innovation in Banking: Some Implications for FinTech
- Community Banking Institutions: Commercial Banks, Savings Banks,Cooperative Banks, and Credit Unions
- Islamic banking: A Review of the Empirical Literature and Future Research Directions
- Can We Improve the Impact of Microfinance?: A Survey of the Recent Literature and Potential Avenues for Success
- Small Business Lending: The Roles of Technology and Regulationfrom Pre-crisis to Crisis to Recovery
- Residential Mortgages
- Shadow Banking
- Modern Central Banking
- Lender of Last Resort: A New Role for the Old Instrument
- Bank Bailouts and Bail-Ins
- Bank Runs and Moral Hazard: A Review of Deposit Insurance
- Bank Capital Requirements after the Financial Crisis
- Market Discipline in Regulation: Pre and Post Crisis
- Competition in the Banking Sector
- Behavioral Economics, Financial Literacy, and Consumers’ Financial Decisions
- Systemic Risk in Banking after the Great Financial Crisis
- Hardy Perennials: Banking Crises Around the World
- Bank Failures, The Great Depression, and Other “Contagious” Events
- Banking Globalization: Cross-border Entry, Complexity,and Systemic Risk
- Banking and Real Economic Activity: Foregone Conclusions and Open Challenges
- Banking in the United States
- Banking in Europe: Integration, Reform, and the Road to a Banking Union
- Banking in Japan: A Post-global Financial Crisis Perspective
- Banking in Africa
- Banking in China
- Banking in the Transition Countries of Central, Southern, and Eastern Europe and the Former Soviet Union
- Banking in Latin America: Developments and Prospects
- Banking in Australia and New Zealand—Geographic Proximity, Market Concentration, and Banking Integration
Abstract and Keywords
Banks perform various roles in the economy. First, they ameliorate the information problems between investors and borrowers by monitoring the latter and ensuring a proper use of the depositors’ funds. Second, they provide intertemporal smoothing of risk that cannot be diversified at a given point in time as well as insurance to depositors against unexpected consumption shocks. Because of the maturity mismatch between their assets and liabilities, however, banks are subject to the possibility of runs and systemic risk. Third, banks contribute to the growth of the economy. Fourth, they perform an important role in corporate governance. The relative importance of the different roles of banks varies substantially across countries and times but banks are always critical to the financial system.
Franklin Allen is Professor of Finance and Economics and Director of the Brevan Howard Centre at Imperial College London and has held these positions since July 2014. He was on the faculty of the Wharton School of the University of Pennsylvania from July 1980 to June 2016. He now has Emeritus status there. He was formerly Vice Dean and Director of Wharton Doctoral Programs, Co-Director of the Wharton Financial Institutions Center, Executive Editor of the Review of Financial Studies and Managing Editor of the Review of Finance. He is a past President of the American Finance Association, the Western Finance Association, the Society for Financial Studies, the Financial Intermediation Research Society and the Financial Management Association, and a Fellow of the Econometric Society and the British Academy. He received his doctorate from Oxford University. His main areas of interest are corporate finance, asset pricing, financial innovation, comparative financial systems, and financial crises. He is a co-author with Richard Brealey and Stewart Myers of the eighth through twelfth editions of the textbook Principles of Corporate Finance.
Elena Carletti is Professor of Finance at Bocconi University and Scientific Director of the Florence School of Banking and Finance at the European University Institute (EUI). Previously she was Professor of Economics at the EUI, holding a joint chair in the Economics Department and the Robert Schuman Centre for Advanced Studies. She is a member of the Board of Directors of Unicredit SpA and of the Advisory Scientific Committee of the European Systemic Risk Board. Furthermore, she is Research Fellow at CEPR, Fellow of the Finance Theory Group, CESifo, IGIER, and the Wharton Financial Institutions Center. Among other appointments, she has worked as consultant for the OECD and the World Bank, has served in the review panel of the Irish Central Bank and of the Riskbank, and has been a board member of the Financial Intermediation Research Society and of the Fondazione della Cassa di Risparmio di La Spezia. Her main research areas are Financial Intermediation, Financial Crises and Regulation, Competition Policy, Corporate Governance, and Sovereign Debt.
Xian Gu is an Assistant Professor of Finance at the Central University of Finance and Economics in Beijing. Previously she worked as a post-doctoral research fellow at Wharton Financial Institutions Center and an economist at CITIC Securities in Beijing. She was also a Visiting Researcher at central banks including Bank of Finland and Hong Kong Monetary Authority. She earned her Ph.D from Beijing Normal University. Her main research interests are banking, corporate finance, and China’s economy.
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