FWIW, the idea of relationship banking (and other non-market aspects of banking) is pretty orthodox these days, appearing in Mishkin's money & banking textbook for example. In theory, banks and non-bank financial intermediaries (as bureaucracies) deal with the adverse selection and moral hazard problems with loan markets.
On Sat, Jul 10, 2010 at 12:20 PM, Eugene Coyle <[email protected]> wrote: > Since I worked at a bank a lifetime ago I have always rejected the notion > that the level of interest rates controls commercial borrowing. It was ALL > about relationships. If you had a good one with a bank you got loans in > tight money periods, perhaps not as much as you wanted but you were > "accomodated." If you didn't have a relationship you couldn't get past a > teller window. Poor Milton Friedman spent his life explaining an industry he > knew little about. > > Gene Coyle > > On Jul 10, 2010, at 11:14 AM, michael perelman wrote: > >> In 1983, Ben Bernanke published an interesting article in which he >> proposed that the real service that banks perform is the development of >> long-term working relationships, which give them the informational >> wherewithal to allocate capital efficiently. >> >> Bernanke, Ben S. 1983. "Nonmonetary Effects of the Financial Crisis in >> the Propagation of the Great Depression" American Economic Review, 73: 3 >> (June): pp. 257-76. >> >> He elaborated on this idea in: >> >> Bernanke, Ben. 1993. "Credit in the Macroeconomy." Federal Reserve Bank >> of New York Quarterly Review, 18: 1 (Spring): pp. 50-70. >> >> more at: >> >> http://michaelperelman.wordpress.com/2010/07/10/young-ben-bernanke-economist/ >> >> >> -- >> Michael Perelman >> Economics Department >> California State University >> Chico, CA >> 95929 >> >> 530 898 5321 >> fax 530 898 5901 >> http://michaelperelman.wordpress.com >> _______________________________________________ >> pen-l mailing list >> [email protected] >> https://lists.csuchico.edu/mailman/listinfo/pen-l > > _______________________________________________ > pen-l mailing list > [email protected] > https://lists.csuchico.edu/mailman/listinfo/pen-l > -- Jim Devine "All science would be superfluous if the form of appearance of things directly coincided with their essence." -- KM _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
