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Marini F. (2013), Bankruptcy Litigation and Relationship Banking, Journal of Business Finance & Accounting, 40, 1/2, p. 272-284
This paper analyzes how bankruptcy litigation affects the value of relationship banking. In our model, bankruptcy courts may make type 1 errors, i.e., they may declare that an insolvent firm is solvent; and they may make type 2 errors, i.e., they may declare that a solvent firm is insolvent. Our model provides four results. First, the cost of bank debt decreases when the probability that bankruptcy courts make type 2 errors increases. Second, the value of relationship banking increases when the probability that bankruptcy courts make type 1 errors increases. Third, the cost of credit intermediation decreases when the probability that bankruptcy courts make type 2 errors increases. Fourth, the diversification mechanism does not fully solve the delegated monitoring problem.
Marini F. (2011), Financial Intermediation in the Theory of the Risk-Free Rate, Journal of Banking and Finance, 35, 7, p. 1663-1668
This paper constructs a general equilibrium model of the interaction between financial intermediaries and financial markets that sheds some light on the short-term volatility of real interest rates. The main findings of the paper are as follows. When financial intermediaries issue contingent (non-contingent) liabilities, an increase in the consumers' relative risk aversion coefficient decreases (increases) the interest rate. Also, the interest rate rises when capitalists are less risk-averse and financial intermediaries are hit by a liquidity shock.
Marini F. (2008), Financial intermediation, monitoring, and liquidity, Oxford Economic Papers, 60, 3, p. 440â461
This paper constructs a theoretical model that integrates the two objectives of capital adequacy requirements and deposit insurance, namely avoiding banking crises and protecting small depositors. The paper also addresses the related question : why do banks fund loans with both equity and demand deposits ? The model determines the optimal bank capital structure. In comparison with a Diamond-Dybvig bank which funds loans with demand deposits only, a capitalized financial intermediary provides liquidity to its depositors at a lower cost, and channels more funds to the most efficient investments. The model identifies the sources of market failure that may justify banking regulation.
Marini F. (2006), Optimal financial crises: A note on Allen and Gale, The Geneva Risk and Insurance Review, 31, p. 61-66
This note provides an example of an optimal banking panic. We construct a model in which a banking panic is triggered by the banker, not the depositors. When the banker receives a pessimistic information on the return on the bank's assets, he liquidates them prematurely in order to protect his capital. In the face of this liquidation, all depositors withdraw their funds prematurely. The premature liquidation of the bank's assets strengthens the bank's balance sheet. As a result, the banking panic does not cause bank failure and the government should not try to prevent the panic. Such a panic occured in 1857 in the United States.
Marini F. (2005), Banks, financial markets, and social welfare, Journal of Banking and Finance, 29, 10, p. 2557-2575
This paper constructs a general equilibrium model of banking and financial markets. The model allows to compare financial systems in which banks have access to financial markets with financial systems in which banks do not have access to financial markets. Allen and Gale [A welfare comparison of intermediaries and financial markets in Germany and the US. European Economic Review 39 (1995) 179-209] find that the Anglo-Saxon model of financial intermediation in which financial markets play a dominant role does not necessarily improve social welfare in comparison with the German model in which banks dominate. Our model provides a theoretical foundation for this view.
Marini F. (2005), The Panic of 1857 as a Bank-Initiated Banking Panic, XXIIèmes Journées d'Economie Monétaire et Bancaire, Strasbourg, France
We construct a model in which a banking panic is triggered by the banker, not the depositors. When a banker receives a pessimistic information on the return of the bank s assets, he liquidates them prematurely in order to protect his capital. In the face of this liquidation, all depositors withdraw their funds prematurely. Such a panic occured in 1857. This kind of banking panic occurs at sufficiently capitalized banks.
Marini F. (2004), Faillites bancaires et garantie des dépôts dans le modèle de Diamond (1984), XXIème Journées Internationales d'Economie Monétaire et Bancaire (GDR), Nice, France
Nous introduisons la garantie des dépôts dans une version modifiée du modèle de Diamond (1984). Nous faisons les deux hypothèses suivantes. Premièrement, il y a des limites à la diversification du portefeuille de prêts. Deuxièmement, la distribution de probabilités des revenus du portefeuille est discrète. Nous trouvons que sous ces deux hypothèses, la garantie des dépôts ne réduit pas nécessairement la probabilité de faillite bancaire. Notre modèle pourrait rendre compte du fait que l'assurance des dépôts n'a pas permis d'empêcher la profusion des crises bancaires dans les pays en développement.
Marini F. (2002), Prêteur en dernier ressort et solidarité de place, XIXème Journées Internationales d'Economie Monétaire et Bancaire (GDR), Lyon, France