Abstract
In this paper, we derive a model of the individual banking firm facing stochastic inflation. The bank is considered as a depository financial intermediary operating in the primary market as a multiproduct price discriminating firm. A secondary market is also considered where liquidity surpluses and deficits are traded. Two types of assets and liabilities are assumed: deposits and loans linked to a general price level and nonlinked instruments. Effects of changes in the parameters such as inflation rate and variability, reserve requirements are analyzed. 1985 The American Finance Association
Original language | English |
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Pages (from-to) | 1159-1171 |
Number of pages | 13 |
Journal | Journal of Finance |
Volume | 40 |
Issue number | 4 |
DOIs | |
State | Published - Sep 1985 |