A model of Austrian economics: Bank behavior
Hagedorn, Hendrik
2014-08-12 00:00:00
[The banks in the model, just like the firms, operate with a profit motive. In the pursuit of profit the banks serve as the financial intermediaries between households and firms, i.e. they convert time deposits into loans. Moreover, the banks offer payment services to their customers, which are provided free of charge. The liquidity management of commercial banks distinguishes between three categories of funds that are used for separate purposes. The sight deposits of the customers are only used for the ongoing payments of the depositors.]
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[The banks in the model, just like the firms, operate with a profit motive. In the pursuit of profit the banks serve as the financial intermediaries between households and firms, i.e. they convert time deposits into loans. Moreover, the banks offer payment services to their customers, which are provided free of charge. The liquidity management of commercial banks distinguishes between three categories of funds that are used for separate purposes. The sight deposits of the customers are only used for the ongoing payments of the depositors.]
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