FOUNDATIONS OF MICRO-BANKING THEORY. CHAPTER 2: Why do financial intermediaries exist? CHAPTER 3: The Industrial Organisation approach to Banking CHAPTER 4: The Lender-Borrower Relationship. CHAPTER 5: The equilibrium and rationing in the credit market
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Ex ante uncertainty defines the liquidity shock
with C< R if relative risk aversion is larger than 1.
early diers consume 1
late diers consume R which is not ex ante efficient
A FI may provide deposits which entail a larger consumption for early diers and lower consumption for late diers thus reaching the efficient allocation.