رونق بازار سهام، ایجاد اعتبار درون زا و پیامدهای بانکداری گسترده و باریک برای ثبات اقتصاد کلان

In this paper we study the implications of the present broad banking system for macroeconomic stability. We show that when commercial banks are allowed to trade in financial assets (here equities) as a substitute for traditional lending, the macroeconomic system is likely to be an unstable one. We then consider a narrow banking system defined by a Fisherian 100 percent reserve ratio for checkable deposits and the ban for commercial banks from trading in stocks and other financial assets. Within the stylized theoretical framework set up here, we show that in the second system macroeconomic stability is guaranteed by some weak assumptions on the behavior of economic agents. Moreover, while a sufficient loan supply can be guaranteed in such a framework, the rationale for bank runs can be eliminated, in contrast to what is likely to happen under traditional broad banking. Though narrow banking is an extreme banking system unlikely to be adopted in the short-run, its features highlight the stability and efficiency properties that the separation between commercial and investment banking bring about.

Over the last 25 years a great deal of research has demonstrated both theoretically and empirically how the financial markets, and especially the commercial banking sector amplify – through the financial accelerator mechanism described by Bernanke and Gertler (1989) – developments that originated in the real side of the economy. However, as pointed out by Bordo (2007), the prominent role of credit in the amplification of shocks at the macroeconomic level was acknowledged much earlier. According to Kindleberger and Aliber (2005), it is the instability of credit that has lead historically to macrofinancial instability, while for Minsky, 1982 and Minsky, 1986 it is the way financing becomes de-linked from the collateral that contributes to a downward spiral once large real or financial shocks occur. In recent times, however, the role and extent of commercial banking itself and the issue of whether it adds to macroeconomic instability has become the focus of a large body of literature (see e.g. Adrian et al., 2010, Brunnermeier and Sannikov, 2010, Gorton, 2009 and Gorton, 2010). Along the lines of this new generation of studies which depart from the rational expectations paradigm in macroeconomic modeling of the last two decades, in this paper we set up a behavioral theoretical macro-financial framework to study the implications of broad and narrow banking for macroeconomic stability. In the first instance we study a broad banking system characterized by the non-separation of commercial and investment banking (such a system was put in place by the partial repeal of the Glass-Steagall Act of 1933 and the Bank Holding Company Act of 1956 through the Gramm-Leach-Bliley Act of 1999).1 In particular we focus on the destabilizing credit channel effect that comes into operation if commercial banks are strongly stock market oriented in their decision on new loan supplies.2 Thereafter we contrast such a system with a narrow banking system, characterized in turn by a Fisherian 100 percent reserve ratio for checkable deposits and the exclusion of trade in stocks and other assets for commercial banks.3 According to the narrow banking view, commercial banks should not be allowed to endogenously create (perfectly liquid) checkbook money out of the central bank money in their balance sheet, where they are therefore simply offering services in the form of depositary institutions, nor should they be allowed to purchase equities through ink stroke money (which would return to them in the form of checkable or time deposits through the circuit of money). If equities cannot be purchased by money creation of type M1 (or vice versa), commercial banks will not so easily engage in speculative behavior, because in such a system banks would no longer hold equities as bank capital. Equities prices would no longer be of importance for the conduct of banks’ businesses and would thus be removed from the loan rate setting policy (see Section 2) of these narrowly defined banks. Furthermore, if the process of checkable money supply remains fully in the hands of the central bank (since it can set the reserve ratio on checkable deposits equal to 100 percent), the rationale for bank runs on checkable deposits would disappear, as the public would know that all checkable deposits in the hands of the commercial banks are backed up by reserves at the central bank. The primary role of the commercial banks – besides being depositary institutions – would then be confined to the active creation of sufficient time deposits through their loan rate and deposit rate setting via the circuit of money, possibly supported in addition by a money supply or withdrawal rule of the central bank in view of what happens in the interaction between the real and the financial markets (to be considered briefly later on). As we will show, such narrowly defined commercial banks (where all sorts of investment banking are excluded) are able to support macroeconomic stability and can be efficient in the satisfaction of the credit demand of firms, besides being safeguarded against banks runs. The remainder of this paper is organized as follows: in the next section the general theoretical framework featuring a broad banking system is introduced by means of the discussion of the balance sheets and flow accounts of the different sectors of the economy. In Section 3 the stability properties of a broad banking macrofinancial system are discussed. Thereafter, in Section 4 the model is modified towards a narrow banking system and its stability properties are analyzed. Finally, Section 5 concludes.

In this paper we have considered the implications for macroeconomic stability of a broad banking system where commercial banks are allowed to trade in capital assets (here equities) as a substitute for traditional lending activities. Using a simple dynamic multiplier approach on the market for goods and a simple rate of return driven adjustment rule for stock prices we have shown that such a scenario is likely to be an unstable one, even if an appropriate monetary policy of the central bank is added to the considered dynamics. We then considered a narrow banking system defined by a Fisherian 100 percent reserve ratio for checkable deposits and the exclusion of stock trade for commercial banks, which also implied a significant reduction of proprietary trading of the banking sector. We showed in a narrow banking system that: (a) the rationale for bank runs no longer exists as all checkable deposits are backed by high-powered central bank money, (b) speculative behavior by commercial banks is excluded by law, while (c) a sufficient loan supply to entrepreneurs can be guaranteed in such a framework. Low and falling stock market prices, increasing liquidity preference and credit rationing are a big problem for any banking system, but in the narrow banking considered here at the very least the exclusion of bank runs (100 percent reserves) may lead to a more stable real-financial market interaction and presumably also a more efficient credit supply than in the case where the traditional function of commercial banks as credit institutions becomes mixed up with investment banking and the like. Narrow banking thus can not only provide a greater systemic stability, but also at least as much efficiency in the credit creation process as the present banking system. As we have shown, such an economy is characterized by strong stability features. In our view this situation is preferable to that of broad or excessive banking, where commercial bank money and credit creation may sometimes be more flexible with respect to large upturns in investment booms, but may also be dangerous in opposite situations; where risk management is likely to fail – as the recent financial crisis has made clear – and where in cases where large bankruptcy scenarios (banks, firms and also governments) can have dramatic chain effects on the working of the national and the world economy. While narrow banking appears a too extreme case to be implemented in reality, its features show the improvements in macro-financial stability which can be attained if broad banking were to be constrained.