search query: @author Pennacchi, G. / total: 6
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| Author: | Gorton, G. Pennacchi, G. |
| Title: | Financial Intermediaries and liquidity creation |
| Journal: | Journal of Finance
1990 : MAR, VOL. 45:1, p. 49-71 |
| Index terms: | LIQUIDITY FINANCIAL MODELS FINANCIAL INTERMEDIARIES STOCK MARKETS |
| Language: | eng |
| Abstract: | Trading losses associated with information asymmetries can be mitigated by designing securities which split the cash flows of underlying assets. These securities, which can arise endogenously, have values that do not depend on the information known only to informed agents. Bank debt (deposits) is an example of this type of liquid security which protect relatively uninformed agents. A rationale for deposit insurance is provided in this context. High-grade corporate debt and government bonds are other examples, implying that a money market mutual fund-based payments system may be an alternative to one based on insured bank deposits. |
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