Microeconomics of Banking [antikvár]

Preface During the last two decades, the economic theory of banking has entered a process of change that has overturned economists' traditional vision of the banking sector. Before that, banking courses of most doctoral programs in Economics, Business, or Finance focused either on management aspects (with a special emphasis on risk) or on monetary aspects (modeling the whole banking sector as a passive aggregate) and their macroeconomic consequences. Twenty years ago, there was no such thing as a "Microeconomic Theory of Banking," for the simple reason that the Arrow-Debreu general equilibrium model (the standard reference for Microeconomics at that time) was unable to explain the role of banks in the economy.' Since then, a new paradigm has emerged (the "asymmetric information paradigm"), centered around the assumption that different economic agents possess different pieces of information on relevant economic variables, and that agents will use this information for their own profit. This paradigm has proved extremely powerful in many areas of economic analysis. Regarding banking theory, it has been useful in both explaining the role of banks in the economy and pointing out the structural weaknesses of the banking sector (exposition to runs and panics, persistence of rationing on the credit market, solvency problems) that may justify public intervention. This book provides a guide to this new microeconomic theory of banking. Rather than seek exhaustivity, we have focused on the main issues, providing the necessary tools to understand how they have been modeled. We have selected contributions that we found to be both important and accessible to second-year doctoral students in Economics, Business, or Finance. Unfortunately, our selection also reflects the incomplete state of the art of a fast-growing and fascinating area of literature.