Optimal Bank Behavior under Uncertain Inflation

YORAM LANDSKRONER*, DAVID RUTHENBERG

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

3 Scopus citations

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 languageEnglish
Pages (from-to)1159-1171
Number of pages13
JournalJournal of Finance
Volume40
Issue number4
DOIs
StatePublished - Sep 1985

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