A Lender of Last Resort or a Securities Market as a Basis for Financial Development: The Case of the Anglo-Palestine Bank

36 Pages Posted: 29 Apr 2004

See all articles by Raphael Franck

Raphael Franck

Hebrew University of Jerusalem - Department of Economics

Miriam Krausz

Bar-Ilan University - Department of Economics

Date Written: April 28, 2004

Abstract

Under a stylized model, this paper investigates the relationships between commercial banks' asset management and the financial institutional structure. More specifically, we compare the effects of the existence of a market for short-term securities with those of a lender of last resort on the structure of banks' assets. We use historical data of the Anglo-Palestine Bank to simulate the results of our model. The conclusion is that the development of a financial market matters more for emerging economies than a lender of last resort since it eases the issuance of long-term loans that are necessary for economic growth.

Keywords: Financial markets, lender of last resort, liquidity risk

JEL Classification: G21, O16, N25

Suggested Citation

Franck, Raphael and Krausz, Miriam, A Lender of Last Resort or a Securities Market as a Basis for Financial Development: The Case of the Anglo-Palestine Bank (April 28, 2004). Available at SSRN: https://ssrn.com/abstract=536742 or http://dx.doi.org/10.2139/ssrn.536742

Raphael Franck (Contact Author)

Hebrew University of Jerusalem - Department of Economics ( email )

Mount Scopus
Jerusalem, 91905
Israel

Miriam Krausz

Bar-Ilan University - Department of Economics ( email )

Ramat-Gan, 52900
Israel
+97 23 531 7220 (Phone)
+97 23 531 3180 (Fax)

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