Limited-Purpose Banking--Moving from "Trust Me" to "Show Me" Banking
Résumé
There are many alleged culprits for the bank runs of 2008 and their devastating economic fallout. But proprietary information and leverage top our list. Claims of proprietary information forced financial markets to operate on trust, while providing the perfect breeding ground for fraud. And leverage permitted creditors to run at the first whiff of fraud, leveling one financial giant after another. Limited Purpose Banking (LPB), presented here, is a financial reform that sharply curtails proprietary information and eliminates leverage and, thus, the possibility of financial collapse. LPB's adoption is supported by our simple model showing how fraud can destroy finance.
Domaines
Economies et financesFormat du dépôt | Notice |
---|---|
Type de dépôt | Article dans une revue |
Titre |
en
Limited-Purpose Banking--Moving from "Trust Me" to "Show Me" Banking
|
Résumé |
en
There are many alleged culprits for the bank runs of 2008 and their devastating economic fallout. But proprietary information and leverage top our list. Claims of proprietary information forced financial markets to operate on trust, while providing the perfect breeding ground for fraud. And leverage permitted creditors to run at the first whiff of fraud, leveling one financial giant after another. Limited Purpose Banking (LPB), presented here, is a financial reform that sharply curtails proprietary information and eliminates leverage and, thus, the possibility of financial collapse. LPB's adoption is supported by our simple model showing how fraud can destroy finance.
|
Auteur(s) |
Christophe Chamley
1, 2, 3
, Laurence J. Kotlikoff
3
, Heracles M. Polemarchakis
3
1
PSE -
Paris-Jourdan Sciences Economiques
( 139754 )
- 48 boulevard Jourdan 75014 Paris
- France
2
PSE -
Paris School of Economics
( 301309 )
- 48 boulevard Jourdan 75014 Paris
- France
3
Department of Economics
( 164571 )
- 270 Bay State Road, Boston, MA 02215
- France
|
Comité de lecture |
Oui
|
Vulgarisation |
Non
|
Langue du document |
Anglais
|
Nom de la revue |
|
Audience |
Internationale
|
Date de publication |
2012-05
|
Volume |
102
|
Numéro |
3
|
Page/Identifiant |
113-119
|
Domaine(s) |
|
Financement |
|
DOI | 10.1257/aer.102.3.113 |
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