Endogenous money and shareholders' funds in the classical theory of banking
de Boyer des Roches, Jérôme (1998), Endogenous money and shareholders' funds in the classical theory of banking, European Journal of the History of Economic Thought, 5, 1, p. 60-84. http://dx.doi.org/10.1080/10427719800000003
TypeArticle accepté pour publication ou publié
Journal nameEuropean Journal of the History of Economic Thought
MetadataShow full item record
Author(s)de Boyer des Roches, Jérôme
Abstract (EN)By its nature, bank money is endogenous, but its issuing is risky and presupposes the presence of banks' shareholders' funds. Shareholders' funds give banks the means of dealing with the difficulties involved in the process of money creation and which are inherent to the banking activity: convertibility constraint, credit and liquidity risks. Unlike the Ricardian paradigm, Smith's 'real bill theory' and Thornton's 'lender of last resort theory' point out the functions of shareholder's funds. Therefore their monetarybanking approachs seem more complementary than contradictory. In other respects, the theory of endogenous money and credit introduces risks and capital in the analysis of exchange and lead to questioning the classical market theory constructed on the model of bartering.
Subjects / KeywordsClassical school of economics; Money; Stock funds; Banks & banking
Showing items related by title and author.