; ; ; "ActiveFedora::Aggregation::ListSource" . a , ; "Private Information, Deposit Interest Rates, and the 'Stability' of the Banking System"; ; "batchuser@example.com"; "Smith, Bruce D. (Bruce David), 1954-2002"; "Federal Reserve Bank of Minneapolis"; "Unregulated banks", "Risk", "Bank regulation", "Instability", "Banking Act", "Banking Act of 1933", "Banking Act of 1935", "Banking panics"; "G11 - Portfolio Choice; Investment Decisions", "E42 - Monetary Systems; Standards; Regimes; Government and the Monetary System; Payment Systems", "D82 - Asymmetric and Private Information; Mechanism Design", "G21 - Banks; Depository Institutions; Micro Finance Institutions; Mortgages"; "\"Summary of Recommendations: . . . Repeal present control by the System over interest rates that member banks may pay on time deposits and present prohibition of interest payments by member banks on demand deposits.\" Milton Friedman (1960, p. 100) \"I conclude that the over-all monetary effects of ceiling regulations are small and easy to neutralize by traditional monetary controls. The allocative and distributive effects are, however, unfortunate. The root of the policy was an exaggerated and largely unnecessary concern for the technical solvency of savings and loan associations.\" James Tobin (1970, p. 5) The regulation of deposit interest rates has received little support from economists. The same is true for the original rationale for such regulation: that bank competition for deposits generates inherent \"instability\" in the banking system. This paper develops an \"adverse selection\" model of banking in which this rationale is correct. Moreover, in this model instability in the banking system can arise despite the presence of a \"lender of last resort,\" and despite the absence of any need for \"deposit insurance.\" However, in the world described, the regulation of deposit interest rates is shown to be an appropriate response to \"instability\" in the banking system. Finally, it is argued that \"adverse selection\" models of deposit interest rate determination can confront a number of observed phenomena that are not readily explained in other contexts."^^; "1984-02"; "2018-03-13T20:15:21.519956852+00:00"^^; ; "19841100jme1403"; "https://creativecommons.org/licenses/by-nc/4.0/"; "2019-07-11T19:56:12.369263932+00:00"^^; "https://creativecommons.org/licenses/by-nc/4.0/"; "Research Paper"; "735"; "Working paper (Federal Reserve Bank of Minneapolis. Research Department)"; "228"; "Instability", "Banking Act", "Banking Act of 1935", "Unregulated banks", "Banking panics", "Bank regulation", "Banking Act of 1933", "Risk"; ; ; ; ; "Federal Reserve Bank of Minneapolis. Research Department"; "Published in _Journal of Monetary Economics_ (Vol. 14, Iss. 3, November 1984, pp. 293-317), https://doi.org/10.1016/0304-3932(84)90045-X."^^; ; "Publication" . ; .