Anmerkungen:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments December 30, 2018 erstellt
Beschreibung:
This paper documents that a rise in government debt is associated with a fall in shadow banking and a rise in traditional banking. This is explained in a model where banks are valued for the financial services they offer. Government debt does not compete directly with banks in providing financial services, but the demand for government debt by banks imparts a liquidity premium to government debt. A rise in government debt is estimated to disproportionately benefit traditional banks so they expand at the expense of shadow banks. An optimal debt policy leads both types of banks to become default free