A Theoretical Model of Brazilian Commercial Bank Asset Choice.
Abstract
The thesis sets forth a dynamic programming model of asset choice by commercial banks, with special application to the Brazilian system. Such a model incorporates temporal interdependence between present and future decisions, while existing models do not. Although it has not been possible to solve the model for the general n-period case, the two period solution is indicative of the influence of temporal interdependence. Longer horizons make it profitable to invest more in physical expansion, with the subsequent positive effects upon future deposit levels. An additional feature of the model is explicit attention to inflation and the role of inflationary expectations upon bank behavior. As expectations alter, the optimal loan level also changes directly and such a circumstance helps explain the accumulation of excess reserves during a period of price deceleration. (Author)
Document Details
- Document Type
- Technical Report
- Publication Date
- Dec 01, 1970
- Accession Number
- AD0718039
Entities
People
- Jair Dos Santos Lapa
Organizations
- University of California, Berkeley